Healthcare By 2015 Mar 2009

IBM Global Business Services

© Copyright IBM Corporation 2006

IBM Institute for Business Value

Healthcare 2015: Win-Win or Lose-Lose?A portrait and a path to successful transformation

Presented by Sal P. Causi, P. Eng. Business Development Executive - HealthcareMarch 12th, 2009


© Copyright IBM Corporation 2006Healthcare 2015 | Apr 12, 2023 2

Growing crisis - - IBM’s prescription

Analysis Healthcare in Crisis: Win-Win or Lose-Lose Transformation?

Prescriptions Transforming Value Transforming Patient Responsibility Transforming Care Delivery

Implications and Recommendations

Outline of Healthcare 2015



Healthcare systems must address major issues and questions in the search for an affordable, sustainable, value-based system

Many healthcare systems are being pushed to a crisis stage, fueled by unrelenting pressures related to cost, quality, and access

Regardless of the ability to pay, consumers on a worldwide basis are demanding more healthcare services

Healthcare funders/purchasers are demanding value for their money

Value will remain elusive without an accountability framework and aligned incentives across key stakeholders

The status quo is no longer a viable option - without major changes, many countries will “hit the wall” (i.e., reach a crisis stage) in the next decade- Tough choices will have to be made to avoid hitting the wall - Even tougher choices may have to be made if a country allows its healthcare system to hit the wall

Stakeholders – consumers, providers, funders, suppliers, societies, and governments – must prepare to transform healthcare systems and be held

more accountable

Summary



Canada and most of its provinces are no exception – concern about the ‘healthcare monster’

Health spending has been growing faster than revenue in all provinces and faster than inflation and economic growth

Nova Scotia data predicts that given a 9% growth in health expenditures, and a 4% growth in overall revenues, by 2024, health will more than consume all provincial revenue

Ontario is spending 38% of all its revenue on health. If you project recent trends into future, 6 of 10 provinces will be at over 50% by 2020. Ontario is tracking to hit 50% in 2020. (Fraser Institute, Oct 2006)

In BC, projections have 71% of the provincial budget going to health by 2017

Conference Board study also points to the unsustainability of health care spending in Ontario – 70% of total revenues by 2022 (Conference Board of Canada, November 2005)

Drugs and home care are fastest growing items - - 20% of health spend going to drugs, was $47 per Canadian in 1975, in 2005 it was $770 (in 2005 constant dollars).

Concern that the “monster” be tamed if we are to ensure sustainability of the system

Healthcare in Crisis: Win-Win or Lose-Lose Transformation?



Drivers, Challenges – “the Perfect Storm” is brewing

Productivity Quality of Care

“Baker Norton & IOM” – Preventable

adverse events, redundant testing,

nosicomal infections

BC Treasury estimates “Health”

will take 71% of public dollars in 10

yrs

Waiting & Access

HealthcareTransformation

Imperative

HealthcareTransformation

ImperativeAn Ageing workforce plagued by paper intensive, ad hoc

processes - Recruitment,

Retention, Retraining

Multiple co-morbidities – +60% of

costs, +70% of ED Visits, 80% of 60+ residents, lifestyle

influenced

Chronic Disease



11.6

10.7

11.1

7.5

10.3

10.1

10.2

9.8

9.1 10

.2

10.2

9.1

9.1

8.9

9

8.3

8.2

7.7

7.5

7.2 7.5

6.4

6.2

15.3

0

2

4

6

8

10

12

14

16

18

20U

nite

d S

tate

s

Sw

itzer

land

Ger

man

y

Fran

ce

Icel

and

Bel

gium

1

Gre

ece

Por

tuga

l

Can

ada

Nor

way

Aus

tria

Aus

tralia

1

Sw

eden

Den

mar

k

Italy

New

Zea

land

Uni

ted

Kin

gdom

Spa

in

Turk

ey

Finl

and

Cze

ch R

epub

lic

Irela

nd

Mex

ico

Pol

and

Change in health expenditure as a share of GDP, OECD countries, 1990 and 2005

% GDP

1990 2005

1. 2003.

2. OECD average for 1990 excludes Slovak Republic as expenditure data is not available.

Source: OECD Health Data 2006, June 2006.




Health care threatens to consume large percentages of the overall provincial revenues – e.g. Nova Scotia

Growth Rate Analysis for Nova Scotia

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

2005

/06

2006

/07

2007

/08

2008

/09

2009

/10

Year 5

Year 6

Year 7

Year 8

Year 9

Year 1

0

Year 1

1

Year 1

2

Year 1

3

Year 1

4

Year 1

5

Year 1

6

Year 1

7

Year 1

8

2024

/25

TotalProvincialRevenueHealth

Assumptions:Health Grows at 9% per annumAll other Dept.'s receive proportionate share of remaining revenues in years 1-4In year 4 when Health consumes all revenue growth, all other departments' budgets permanently frozenIn year 4 when Health consumes all revenue growth, initial revenue deficits applied to restructuring fund 1st




Provincial / Territorial health expenditures have continued to rise from 1975-2007

Provincial /Territorial Health expenditures 1975-2007- current dollars

0.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

Year

$100

,000

's

N.L.

P.E.I.

N.S.

N.B.

Source: Canadian Institute for Health Information.




10.7%

13.1%

10.6%

6.9%

10.8% 10.3%

13.6%

9.8%

13.5%13.2%

10.8%

0%

2%

4%

6%

8%

10%

12%

14%

16%

N.L. P.E.I. N.S. N.B. Que. Ont. Man. Sask. Alta. B.C. Canada

Y.K.: 13.3%N.W.T: 7.6%Nun.: 27.5%

Total Health Expenditure as a Proportion of GDP, 2006

Source: Canadian Institute for Health Information.




Health care sustainability raises real concerns

The viability of our health care system - - repercussions for access, quality and willingness of Canadians to rely on the publicly funded system

Crowding out spending on other provincial responsibility - - education, social support, economic and transportation infrastructure

Economic competitiveness

Chaoulli case – illustrative of sustainability related stresses- The case suggest that confining residents to publicly funded services runs against charter rights if the public system does not offer reasonable access

- It highlights our conflicting values - social solidarity vs. our individual rights to buy what we need – the ‘consumer value’

- It is likely just the first of numerous legal interventions on policy questions




Five drivers make healthcare fundamentally different from the past





Counterbalancing the drivers for change are key inhibitors that threaten to maintain the healthcare status quo



In 2015, countries will find themselves in one of four scenarios based on how they address the drivers and overcome the inhibitors




What the lose-lose scenario could look like in Canada

Growing access and quality issues Provincial governments applying blunt cost reduction measuresConsumer push back through the legal system e.g. Chaoulli caseCanadians lose confidence in our publicly funded health care systemThe Canadian middle class increasingly view their health care as second rate and their longstanding support for a universal/public system breaks down

Significant numbers of consumers purchase health services outside the public system

Increasingly publicly funded health care becomes the care of last resort, care users turn to when they cannot afford to pay for it themselves or when any private insurance coverage they might have had is depleted.

Many disillusioned and overburdened health care providers in the publicly funded system will move to privately funded care, thus adding to a self-reinforcing dynamic of the decline of publicly funded health care in this country



These questions can help a country (or province) assess its capacity to transform

Category Questions Sample Metrics

FundingWill enough be available?Will it be prioritized and spent well?

% Public/private spending

% of GDP

Consumers

What is the overall health status?What are societal expectations and attitudes? What is the willingness to change behaviors?How many “literate health activists” are there?

Healthy life expectancy at birth (HALE)

Disability adjusted life years (DALYs)

Government

Does the government have the leadership, political will, and stability to drive significant change?

Do government policies and regulations enable transformation?

Ability to prioritize and follow through

Emphasis on accountability in funding arrangements

Healthcare Industry

Are key stakeholders willing to change?Is the healthcare infrastructure (e.g. facilities and IT) appropriately robust?

Incentives reward a longer term view

Ability to share data




Countries that successfully transform their healthcare systems (i.e., “win-win” scenario) will demonstrate three changes

Focus on value - Consumers, providers, and payers will increasingly direct healthcare purchasing, delivery of healthcare services, and reimbursement monies based on value

Develop better consumers- Consumers will make better lifestyle choices and become wiser purchasers of healthcare services, frequently with the help of health infomediaries

Create better options for promoting health and providing care- Consumers will increasingly seek out more convenient, effective, and efficient means, settings and providers




Transforming Value



Perspectives on value from the healthcare system differ among stakeholders but must be balanced and reconciled for a win-win

Consumers

Society

Payers

ProviderIncentives

Financial incentivesto treat and to do more, not to prevent

Wellness and preventionHigh quality, cost-effective acute &chronic care

Fix me regardlessof cost or cause

Healthcare isa societal right

Today

Minimize unit costsand shift costs

Future

Help keep me wellProvide appropriate, cost-effective,high quality care when needed

Transparent cost/quality informationAble to accept value-basedreimbursement

Healthcare is a societal right – butavailable funds must be prioritizedwell across the hierarchy of needs

Value Based Transformation

Sup

ply

Dem

and

Transforming Value



Environmental Health Needs (e.g., clean water, adequate sanitation, and clean air)

Basic Healthcare Needs(e.g., immunizations and preventive screenings)

Medically Necessary Needs(e.g., acute care for sickness or injury)

Optimal Health(e.g., holistic & personalized

health & wellness)

Health Enhancements(e.g., cosmetic and LASIK surgeries)

Healthcare systems must balance and resolve these differences by establishing and addressing the needs of stakeholders

MarketService

SocietalRights

FiniteNeed

s

Transforming Value

Hierarchy of Healthcare Needs Model Funding Gap

Virtually Infinite Needs



Transforming Patient Responsibility



In assuming more responsibility for their healthcare, consumers will make wiser health and wellness decisions as patients and purchasers

In developed/developing countries, citizens are increasingly assuming greater responsibility for managing and paying for their healthcare services and for their personal health management

- Keys to this enhanced responsibility include –

Comparison shopping for healthcare based on readily available, reliable cost and quality information

Information access (e.g. through interoperable EHRs and PHRs) will enable providers and consumers to practice personalized medicine and to make better choices during care delivery

Rise of the “health infomediary” for both the well and the chronically ill and for a much broader socioeconomic segment of the population

Better health through better choices will become a reality through the proliferation of healthy living education and social responsibility programs

Transforming Patient Responsibility



Transforming Care Delivery



By 2015, individualized care will increasingly be delivered at more convenient locations, by more affordable and effective healthcare teams

In developed and developing countries, healthcare consumers will seek out more convenient, effective, and efficient healthcare means, settings, and providers- Payers – governments, third-party health insurers, etc. – will direct its

citizens and customers, respectively, to these alternative options- Current examples include medical tourism, integrative medicine, and retail

healthcare, on-line healthcare

The shift in consumer attitudes toward venues of healthcare delivery will be accompanied by a corresponding shift in how, where, and who provides preventive, acute, and chronic care services- In general, there will be a shift from episodic and acute care to more

patient-centered, value-based, longitudinal care by healthcare teams- There will be better management of chronic conditions, especially as more

acute diseases evolve into chronic diseases through advancements in detection and treatment




In 2007 in the developed world, healthcare services are typically acute and provided locally by physicians in outpatient and hospital settings


Patients Care Delivery

Age Group SettingSocio-

economicStatus

Access Location Provider Service

Infants

Adolescent

Adult Men

Adult Women

Senior Men

Senior Women

Rural

Suburban

Urban

High

Medium

Low

In Person

Telephonic

Electronic

Home

Outpatient Setting

Hospital

Emergency Department

Long Term Care

Internet

Call Center

Risk Assessment

Prevention

Acute - Diagnosis

Acute - Treatment

Chronic - Diagnosis

Chronic - Treatment

Traditional Providers

Public/Private Insurers

Alternate Providers

Midlevel Provider

Health Infomediary

CatchmentArea

Local

Regional

National

International



Care DeliveryPatients

HealthStatus Setting

Socio-economic

Status

CatchmentArea Access Location ServiceProvider

By 2015, payers, providers, and suppliers will focus more on market segmentation and channel management


Healthy

Minor Ailments

At Risk

Acutely Ill

Chronically Ill

Catastrophic-ally Ill

Rural

Suburban

Urban

High

Medium

Low

In Person

Telephonic

Electronic

Home

Outpatient Setting

Hospital

Emergency Department

Long Term Care

Internet

Call Center

Wellness

Risk Assessment

Prevention

Acute Care

Chronic Care

Complement-ary Care

Traditional Providers

Public/Private Insurers

Alternate Providers

Midlevel Provider

Health Infomediary

Local

Regional

National

International

Consumers Will Seek Out More Healthcare Delivery Channels



New healthcare business models are emerging to fill the cost, quality, convenience and access gap

Wellness Centers

Acute Care Wellness/

PreventionChronic Care

Ambulatory ICUs

Centers of Excellence

Medical Tourism

Telemedicine

Retail Clinics

Concierge Medicine

Ambulatory Surgery Centers

Medical Home

Analysis >> New healthcare requirements, delivery models, capabilities, and reimbursement

Specialty Hospitals



Medical tourism is beginning to subject healthcare delivery to global competitive pressures

ProcedureUnited States

Mexico Costa Rica India Thailand Singapore

Angioplasty $33,000 $13,125 $14,500 $7,800 $9,200 $12,500Heart bypass $37,000 $14,400 $13,600 $6,650 $11,000 $13,500Hip replacement $45,000 $9,400 $13,000 $6,500 $8,000 $9,000Knee replacement $21,000 $10,500 $9,500 $6,500 $8,500 $10,000Laparoscopic hysterectomy

$19,000 $4,275 $6,500 $2,238 $4,500 $4,500

Laparoscopic prostatectomy

$27,500 $16,800 $11,500 $5,900 $9,500 $16,000Source: PlanetHospitalNote: Prices do not account for travel or accommodations costs. Expenses can also increase if there are complications with the procedure. United States rates reflect Medicare reimbursements for hospital services but not for medications or anesthesia.




Since the late 90’s, we have worked with customers to advance IT to support transformation.

QuebecProvincial EMPI ImplementationDrug Info System: e-scriptsMother-Child Network (20 sites)Laval EHR (11 sites)Blood Management Network (88 sites)

OntarioTrillium Project Office & Help DeskTrillium Provider & Consumer Portal St Michael’s Hospital AllianceKGH & St T. Elgin Wireless Nurse CallMOH EMPI & DI/PACS StrategySSHA Change MgtNational Paediatric Wait Time SystemCAMH Strategic OutsourceThe Ottawa Hospital Clinical PortalLHIN 4 IT StrategyTEN DI PACS InfrastructureChild Health Network (50+ sites)

British ColumbiaChronic Disease ToolkitPan-Cdn Public HealthHealth Data WarehouseFraser DI/PACSFraser Emergency Dept

Process “Gold Standard”

ManitobaWRHA DI PACS InfrastructureHealth Surveillance Network

AlbertaProvincial EHR (Orion) DeploymentDrug Info System: e-scriptsHip & Knee Process Re-designCalgary Clinical ImplementationCalgary Strategic Outsource

New BrunswickDI/PACS StrategyDI/PACS Infrastructure

FederalHealthcare 2015 e-Therapeutic Portal

SaskatchewanSaskatoon Primary Care Governance

Health Security ArchitectureDrug Information System: e-scripts



Health jurisdictions can employ a set of practical, relevant, broadly-applicable recommendations to address the challenges of this transformation

Vision and Plan

Where do we want to be?

How do we get there?

Case for Change

Why Change?

Lose-Lose Scenario

Principles

SustainabilityAffordabilityPracticalityTransparencyEquity…

Universal Coverage IT-Enabled Innovation & Best Practices

Improve quality and cost Eliminate clinical and

administrative waste Improve productivity Inform and empower consumers Make informed transformation

decisions Trigger insights that can lead to

innovations




Successful transformation will require active participation, collaboration and changes by all stakeholders

Value Consumer responsibility Care delivery

Health systems

Develop a vision, principles and metrics that enable and reward a shared perspective on value

Provide universal insurance for core services, including preventive and primary care

Reward good behaviors

Remove barriers to innovation while still protecting consumers and other stakeholders

Care delivery organizations (CDOs)

Focus on high-value services

Develop teams of caregivers

Implement interoperable EHRs to help enable high-value services

Help inform and empower consumers by providing transparency into pricing and quality

Develop channels and care venues that are closer to the patient.

Implement interoperable EHRs to support information exchange across venues

Physicians and other clinicians

Utilize evidence-based, standardized processes and care plans

Help develop meaningful outcomes data

Develop collaborative partnerships with patients

Help consumers take more responsibility for their health

Monitor compliance

Expect interoperable EHRs to support information exchange among caregivers

Focus on the opportunities that come with change

Consumers Expect pricing and quality information

Become a smart shopper Utilize a health

infomediary

Take responsibility for living a healthy lifestyle.

Create and maintain a personal health record (PHR)

Document advanced healthcare directives.

Expect and demand new delivery models and coordination of care across these new models




Successful transformation will require active participation, collaboration and changes by all stakeholders. (continued)

Value Consumer responsibility Care delivery

Funders Develop a viable transition plan to value-based reimbursement.

Help consumers navigate the health system

Help provide personalized information and advice to help consumers maintain and improve their health status

Align incentives with preventive and proactive chronic care, and with innovative, cost-effective approaches

Suppliers Collaborate with CDOs to develop offerings that help provide better longer term outcomes or lower prices for equivalent outcomes

Help identify the right patients and providers and then educate them to achieve better results across all steps of the care process

Help enable new models through simplification and miniaturization; mobile devices; and personalized solutions packages

Society Clearly recognize the need for tough decisions, prioritization & tradeoffs

Actively participate in efforts to improve value

Stress prevention and personal accountability

Expect and promote healthy lifestyles

Keep pressure on the healthcare system to change and meet the needs of its customers

Governments Emphasize value, accountability and alignment of incentives

Require results reporting Develop a funding

strategy for the infrastructure and for independent research

Help protect security/privacy of electronic health information

Require insurance coverage for everyone, with subsidies for those who need them

Change and set policies, regulations and legislation in order to remove barriers (e.g. the patchwork of licensure regulations) and to enable and promote the right actions




Care delivery organizations (e.g. health regions) must envision the future healthcare environment and transform

Factor From(typical of today’s healthcare)

To(to successfully transform)

Accountability Safety, quality but with few incentives or penalties, focus on removing “bad apples”

Value, evidence-based standardized processes, outcomes, access

Incentives Mostly financial to maximize reimbursement

Outcomes, follow evidence-base standards, patient satisfaction

Information Management

Predominantly paper-based, fragmented

Electronic, interoperable, accessible, secure and private, real time decision support at the point of care

Innovation New medical technologies, research in academic medical centers

Keeping people healthy; improving overall value and quality of care; better coordination of care; more rapid adoption of best practices and methods

Basis for Competition

Geographic coverage, reputation, broad array of services, new technologies

Differentiated value (cost, quality, access); specialized; channels/sites closer to the patient

Focus of System Acute, reactive, episodic Predictive, preventive, chronic; life-long, coordinated management; personalized




And care delivery organizations should begin positioning themselves to serve their future customers

Determine how to differentiate from competitors, both traditional and non-traditional alike- Being “all things to all people” will no longer suffice - Be prepared to compete in an environment of price and quality

transparency Evaluate growth plans in light of possible changes in the healthcare

environment- Organizations cannot solely focus on how to maximize revenue - Future revenue streams, types of services or the desired relationships with

patients/consumers must be considered Segment future customers and develop a channel strategy Recognize new buying influencers such as health infomediaries




And care delivery organizations should begin positioning themselves to serve their future customers (cont.)

Develop teams of caregivers matching the skill level and location of the caregivers to deliver patient-centric and coordinated care- Staffing shortages, high costs, the need to develop partnerships with

patients, and the need for new services are mounting- While physicians will continue to be important, midlevel providers will provide

more preventive, chronic, and routine acute care Develop and follow evidence-based, standardized processes and care

plans- As value takes on more importance and quality become more transparent,

organizations will see an increasing need to reduce variation in processes and care plans

Implement interoperable electronic health records (EHRs)- Organizations will not be able to implement the standardized processes and

care plans without robust EHR capabilities- Practitioners must have EHRs to access to relevant patient information and

medical content when treating patients




Conclusion

The stakes are very high

The consequences of failing to address the challenges to health care sustainability are daunting

But health care jurisdictions that are successful in transforming will reap huge benefits- Harnessing remarkable new technologies and treatments- New levels of personal engagement in their health and health care- The healthiest citizenry in history- Competitive advantage in a global economy



This Transformation requires substantial change in Process, People and IT.

Background

Productivity

Waiting & Access

Quality & Safety

Chronic Disease

Mgt.

Value Realization

Physician/Clinician Integration

Technology Fusion

Workforce Transformation

Clinical & Business Process

Optimization

Value Realization

Physician/Clinician Integration

Technology Fusion

Workforce Transformation

Clinical & Business Process

Optimization

Common Elements/Underlying Principles

Governance & PMO Infrastructure

Clinical Care Supported by Technology; People,

Process and Product Knowledge



Finally …………

It is not the strongest of the species that survives, not the most intelligent, but the one most responsive to change.

Charles Darwin

“People don’t change when you tell them there is a better option. They change when they conclude they have no other option.”

Michael Mandelbaum



As well as IBM’s focus on Life SciencesAs well as IBM’s focus on Life Sciences