David M Cutler Harvard University May 2010 Disclosure Speaking US Oncology MedImpact IMS AHIP Brokers and Reinsurance HFMA chaindrugstorenet Government Senior advisor to Obama presidential campaign advised Administration and Congress ID: 625148
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Slide1
The Coming Health Care Transformation
David M. Cutler
Harvard University
May 2010Slide2
Disclosure
Speaking: US Oncology, MedImpact, IMS, AHIP, Brokers and Reinsurance,
HFMA, chaindrugstore.netGovernment: Senior advisor to Obama presidential campaign, advised Administration and Congress,
CBO Board of Health Advisors
2Slide3
3
What is reform about?
Getting everyone covered
Improving the value of care
Addressing the US fiscal
situationSlide4
4
The premise of health reform
Medical care is inefficiently provided, and this both lowers quality and drives up cost.
• Therefore, we should be able
to improve the value of care by
modernizing
the health system
.
•
Fundamental issue:
lack of
coordination.Slide5
Integrating the care episode
The Care ExperienceSlide6
6
Examples of low
productivity
Overuse of administrative personnel
Too many and too costly acute care episodesMedical errors
Source: US Department of LaborSlide7
7
The Drivers of Productive Industries
IT
and
its
use
[
ARRA
, 2009]
Move from
pay-for-volume to
pay-for-value
[
PPACA
, 2010]
Engaging
employees
and consumers in continuous quality improvementSlide8
8
Medicare Compensation
Changes, PPACA
Bundled payments
Hospital + Post-AcuteChronic conditions at the patient level
Accountable care organization
Value-based purchasing
Chronic disease management
Surgical
quality
Care transitions/coordinationSlide9
9
Integrating the care episode
Who Should/Will Integrate Care?
PCP (medical home)
Insurer
Google/Microsoft
iPhone
developers
New firmsSlide10
Three Implications of Organizational Reform
The information industrySize of organizationsProfits
10Slide11
11
1. The Birth of a New Industry
Data organization, retrieval, and analysis are key areas
Patient encountersCost-effectiveness
analysis
Learning which
providers
are
better
and
worse
Look for a data/quality assessment industrySlide12
12
12
2. Increased consolidation
In every industry where information has become a key commodity, firms have gotten bigger
Retail trade (Wal-Mart, Target, Best Buy)
Banking (Bank of America)
Legal services
This has happened, and will continue in health care.Slide13
13
What do the following people have in common?
Name
William Cook
Barbara Piasecka Johnson
Ronda Stryker
Jon Stryker
Thomas Frist Jr.
Alfred Mann
Pat Stryker
Patrick Ryan
John Abele
Gary Michelson
John BrownSlide14
14
They are health care people in the Forbes 400
Num
Name
Net Worth (bn)
Source
68
William Cook
$5.0
Catheters, stents, etc.
123
Barbara Piasecka Johnson
$3.3
Pharma
134
Ronda Stryker
$3.0
Stryker (joints, surgical tools, etc.)
215
Jon Stryker
$2.1
Stryker
246
Thomas Frist Jr.
$1.9
HCA
262
Alfred Mann
$1.8
Insulin pumps, cochlear implants
262
Pat Stryker
$1.8
Stryker
301
Patrick Ryan
$1.6
Re-insurance broker
321
John Abele
$1.5
Boston Scientific
321
Gary Michelson
$1.5
Spinal implants
355
John Brown
$1.4
StrykerSlide15
15
Retailers on Forbes list
Num
Name
6
Wal-Mart
5
Home improvement (2 Home Depot)
3
Gap
1
Best Buy (Richard Schulze)
1
Supermarket (Federik GH Meijer)
1
Real estate development (E. Stanley Kroenke)
1
Global outsourcing firm (Victor Fung)
1
Hobby Lobby (David Green)
1
Urban Outfitters (Richard Hayne)
1
China sales (Roger Wang)Slide16
16
3. The
next healthcare billionaires
Whoever figures out how to:Coordinate care
Streamline medical practiceOverhaul administrative processesEnsure proper care combinations
Manage information