Analyzing the US Healthcare Reform & How it is Affecting Healthcare

1. GREG STOCK, CEO THIBODAUX REGIONAL MEDICAL CENTER MAY 11, 2011 Analyzing the US Healthcare Reform & How it is Affecting Healthcare

2. 3. Pushed Out by Rising Insurance Costs Cumulative Changes in Health Insurance Premiums, Inflation, and Workers Earnings, 1999-2008 Source:Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2000-2008.Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 2000-2008; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 2000-2008 (April to April).Growth In Healthcare Insurance Costs Are Now Making Affordability Difficult for Individuals and Small Businesses 4. Patient Protection and Affordable Care Act - March 23, 2010 5. National and State Healthcare Legislation

National Legislation:

Patient Protection and Affordable Care Act (PPAC)

Passed & signed into law in March, 2010

Approximately2,700 pages long

Most significant changes to American Healthcare since 1983

Cost:

$940 billionover ten years.

Deficit:

Would reduce the deficit by $130 billion over the first ten years. Would reduce the deficit by $1.2 trillion dollars in the second ten years.

Coverage:

Would expand coverage to 32 million Americans who are currently uninsured

6. Medicare & Medicaid Payment Cuts

Paying for Reform

Nationally, hospital payments will be cut $155 billion over 10 year period beginning in 2010 to help pay for expanding coverage to 32 million.

7. Louisiana Medicaid Inpatient Hospital Payments Compared to Medical Care Inflation 19972.6% MCD rate increase2001$25 million appropriated for 2.5% MCD rate increase 2006$38 million appropriated for 3.8% MCD rate increase 2007$33 million appropriated for 4.75% MCD rate increase 20093.5% mid-year reduction in Feb & 6.3% IP / 5.65% OP reduction in Aug (approximate $90 million total impact to hospitals including outlier reductions) 20105% mid-year reduction in Feb (approximately $50 million impact to hospitals) & 4.6% estimated reduction passed in recent state budget ( estimatedimpact of $46 million at present pending additional data) Medical Care CPI projected for 2009 and 2010 using average of the three previous years; Medicaid Enrollment Increases for 1995 and 1996 based on average of three subsequent years; Medicaid Enrollment Increases for 2009 and 2010 based on average of three previous years 8. State of Louisiana Burdens UnderNational Health Reform

At 133% of Federal Poverty Level, nearly 42% of all Louisiana residents would qualify for Medicaid!

260,000 residents could be added to Medicaid rolls.

This alone could cost the state anadditional $614 million in state dollars.

9. Nursing Home Quality Initiative CMS Updates Hospitals on HCAHPS New Multi-Million Dollar Initiative to Reward Doctors and Hospitals for Higher Quality Care 10. 11. HCAHPS - % of time patient chose"Always" 12. Quality is BecomingTHEStrategic Initiative

Focus on payment for quality & efforts to reduce costs

New payment & delivery models to improve quality & efficiency

- Value-Based Purchasing

- Bundled Payments (includes pre-op, inpatient hospital, all physician services, & post-acute care services)

- Comparative Effectiveness

- Accountable Care Organizations

13. Affordable Care Act Value Based Purchasing Rule

Dollars at Risk for Quality:

6% of base DRG payments by 2017

HAIs 1%; Readmissions 1-3%; Value-Based Purchasing 1-2%

Weighted scoring system:

70% Clinical domain17 process measures currently in place

30% patient experience domainHCAHPs

Beginning FY13 Hospitals Scored on:

Achievement

Improvement

Total Performance

14. Example: Hospital Readmissions

Preventable situations

$25 billion in wasteful spending annually

Driven by:

Poor discharge planning

Inadequate follow up

Insufficient health information technology

Current rate:

1 in every 5 Medicare patients readmitted within 30 days

Solution:

Get it right the first time through best practices and consistency

15. Opportunity vs. Danger 16. Recognizing Opportunity as a means to achieve Excellence

One Goal:Better overall healthcare outcomes at lower costs

Culture of Performance Improvement

Business Model Change

Strategic Initiatives for Excellent Clinical Outcomes

Physician Integration

17. Culture of Performance Improvement

Six Sigma/Lean /DIGs

AProven Systematic Structures Approach

Resources Allocated:

2 MBBs, 20 Green Belts, 113 Lean Leaders, 42 DIG Facilitators

Focus:

Quality Core Measures, HAIs

Patient SafetyBedside Medication Verification

Cardiology OutcomesConsultant Engagement

Service LinesImaging, OR, Cancer Care

Finance Contract Compliance, Supply Cost Reduction

18. Risk-adjustedMortality Ratios Coronary Artery Bypass Surgery Valve Replacement Surgery Coronary Interventional Procedures Acute Myocardial Infarction Congestive Heart Failure 19. Business Model Change 20. Strategic Initiatives for Improving Clinical Outcomes

War onInfections

Targeting the elimination of Hospital Acquired Infections

60% reduction in CAUTIs

40% overall reduction in HAIs

21. Strategic Initiatives for Improving Clinical Outcomes

Call to Action A plan to survive & thrive in an uncertain environment to remain a leading healthcare provider by Creating a Culture of Lean Thinking