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Maryjane WurthEVP & COO, American Hospital AssociationPresident & CEO, Health Forum
The Future of Healthcare in Light of the Current Legislative and Regulatory Landscape
Louisiana Hospital Association Winter Healthcare Leadership SymposiumJanuary 30, 2018
Federal Fiscal Year 2018
October 12017
September 302018
December 8 December 22
Basic funding the government
IMMIGRATION
• DACA• The wall
CHIP
• MedicaidDSH cuts
MEDICAREEXTENDERS
• Low volume• Medicare
dependent hospitals
DISASTERRELIEF
PRIVATEMARKET
STABILIZATION• CSRs• State grants for
reinsurance
January 19 February 8
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Medicare “Extenders”
• Medicare-Dependent Hospitals (S. 872/H.R. 1955)September 30
• Enhanced Low-volume Adjustment (S. 872/H.R. 1955) September 30
• Ambulance Add-On Payments(S. 967/H.R. 3236) December 31
• Therapy Caps (S. 253/H.R. 807)December 31
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Two Options
Alexander-Murray• Provides short-term funding for the CSR
payments • Expands access to lower-cost,
catastrophic health plans• Gives states additional flexibility to use
1332 waivers• Provides states with outreach and
education funding• Directs HHS to issue regulations
facilitating the sale of insurance products across state lines
Hatch-Brady• Funds CSR payments for two
years and eliminates temporarily certain ACA mandates
• Eliminates the ACA’s individual mandate from 2017-2021
• Eliminates the ACA’s employer mandate from 2015-2017
• Expands the use of HSAs
Market Stabilization - Two Options
“Tax Cuts and Jobs Act”
• Hospital Tax-Exempt Bonds• House provision to repeal not included
• Advance Refunding of Bonds• No advance refundings after 12-31-2017
• ACA Mandate• Repealed after 12-31-2018
• Medical Expense Deduction• Extended at 7.5% until 2019
• Interest Deduction for Corporate Debt• Capped at 30%, but based on House definition of
income until 2022
• Executive Compensation Tax• 21% employer excise tax for top five over $1
million
PUBLIC LAW 115-97
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Infrastructure
Expand the digital infrastructure for health care
Strengthen the capacity for emergency preparedness and response
Assist hospitals in “right-sizing” to meet the needs of their communities
Ensure adequate financing mechanisms are in place for hospitals and health systems
Infrastructure needs in health care are significant.
Investment is needed to:
The Affordable Care Act marketplace enrollment was almost as high for 2018 as it was for 2017. According to CMS, as of December 23, 2017:• 8.7 million individuals enrolled • In 2017, enrollment was 9.2 million
Public Views on the ACA
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340BTelling the 340B Story
Recent Regulatory Activity • Association Health Plans proposed rule• Medicaid 1115 waiver guidance on work
requirements • FCC Rural Healthcare Program proposed
rule to increase cap (broadband)• Bundled Payments for Care Improvement
(BPCI) Advanced Initiative
•BPCI- Advanced
Seema Verma Administrator of CMS
Alex Azar, nominee Secretary of HHS
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AHA Vision and CommitmentsOur vision: A society of healthy communities where allindividuals reach their highest potential for health
ACCESS: Access to affordable, equitable health, behavioral and social services
VALUE: The best care that adds value to lives
PARTNERS: Embrace diversity of individuals and serve as partners in their health
WELLBEING: Focus on wellbeing and partnership with community resources
COORDINATION: Seamless care propelled by teams, technology, innovation and data
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Economics of LA Health Care
In 2015, Louisiana hospitals:
• Employed 103,400 people
• Had a payroll of $5.5 billion
Healthcare, including hospitals, is the largest business sector:
• Over 294,900 employees
• Annual wages and salaries of almost $12.6 billion
More than 1,000 new jobs directly created because of Medicaid expansion.
Hospitals and the Louisiana Economy, 2016, Prepared for the Louisiana Hospital Association by James A. Richardson, Alumni Professor of Economics, Louisiana State University, May 2016Medicaid Expansion Annual Report 2016/17, Louisiana Department of Health
2016 Gross Revenue Shares by Payer
42.8%
18.3%
37.4%
1.5%
MedicarePrivate
Medicaid
Other
Source: American Hospital Association Annual Survey data, 2016, for community hospitals. This data does not include financial results for non hospital-based activities.
Includes Medicaid and Medicare Disproportionate Share payments.
Government payers account for 60 percent of revenues.
54.3 56.1 57.7 59.4 61.1 62.9 64.8 66.6 68.4 70.2 72.0
69.3 71.1 72.4 73.6 74.8 75.9 76.8 77.7 78.5 79.2 79.9
6.1 6.6 7.5 7.7 8.0 8.1 8.3 8.4 8.5 8.6 8.7
0
10
20
30
40
50
60
70
80
90
Mill
ion
s
Medicare Medicaid CHIP
Medicare, Medicaid, and CHIP Projected Enrollment Growth
Source: Centers for Medicare and Medicaid Services. National Health Expenditures Projections 2015-2025. November 2017.
* Enrollment numbers for 2016-2025 are projected.
Government payers account for 60 percent of revenues
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Per capita healthcare spending vs. consumer prices and average wages
2006200420022000199819961994199219901988
1.5
2.5
3.0
2.0
1.0
201220102008
3.5
Pric
e In
dex
Consumer Price IndexAverage WagesPer Capita Healthcare Spending
$20,099
$42,979
$8,684
$2,579 225.7
126.1 79%
114%
237%
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Special Bulletin Provides AHCA Update
Hospital price growth
Factors Impacting Affordability
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Key Stakeholders Impacting Affordability
Doing Our Part: Value and Innovation
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Value-based Strategies Identified by Members
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Initial Offerings
Innovation and Affordability Programs
The Innovation 90 Program AHA Innovation Academy
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Hospital and Health System Transformations
Hospitals with an ACO hassteadily increased
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7%8%
11%12%
13%
2012 2013 2014 2015 2016
Hospitals are taking on more risk
More hospital payment contracts with commercial
payors are tied to quality/safety performance
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3,1003,144
3,183 3,1983,231
2,750
3,000
3,250
3,500
12 13 14 15 16(1)
Number of Hospitals Part of a Health System, 2012 – 2016
Source: Analysis of American Hospital Association Annual Survey data, 2012-2016, for community hospitals.
Over 3,200 hospitals (67%) now operate as part of a health system.
31
Announced Hospital Mergers and Acquisitions, 2012 – 2016
Source: Irving Levin Associates, Inc. (2017). The Health Care Services Acquisition Report, Third Edition. (1) In 2013, consolidation of several investor-owned systems resulted in a large number of hospitals
involved in acquisition activity.
10588 99 102 90
242
293
175
265 245
$0
$5
$10
$15
0
50
100
150
200
250
300
350
12 13 14 15 16
billi
ons
Number of Deals
(1)
Quality and Patient Safety• Quality and patient safety
must be top priority
• High reliability organizations− Zero tolerance for error
• Addressing disparities
• Looking over horizon− Under-utilization
− Explosion of measures
− Diagnostic error
− Measuring clinical teams vs. individual providers
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Hospital Engagement Network 2015-2016
Advancing Higher Reliability Organizations
Shared Decision‐MakingCommon Language for Leadership
BE WELLFostering Resilience and Well‐
Being
• Shaping national dialogue on resiliency and well‐being
• Reducing regulatory burden• Professional satisfaction• Increasing sense of community
LEAD WELLDeveloping Leadership
Capacity
• Curated leadership curriculum and faculty resources
• Accelerating team‐based care• Physician governance resources• Onboarding/role responsibility
resources
CARE WELLDelivering High‐Value Care and
Managing Populations
• Fostering high reliability cultures• Ensuring appropriate use of
resources• Shaping care & payment redesign• Improving ability to foster
community health
Education, Technical Assistance, Podcasts, Knowledge Hub, Toolkits, Learning Collaboratives
Vision: A society of healthy communities where all individuals reach their highest potential for health.
AHA Physician Alliance
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Public Health Emergency on Opioids
In 2016, the age-adjusted rate of drug overdose deaths in the United States was more than three times the rate in 1999.
Drug overdoses are now the leading cause of death among Americans younger than 50.
Since 1999, the amount of prescription opioids sold in the U.S. nearly quadrupled, yet there has not been an overall change in the amount of pain Americans report.
The majority of drug overdose deaths – more than 6 out of 10 – involve an opioid.
In 2016, Louisiana is one of 22 states plus the District of Columbia that had age-adjusted drug overdose death rates that were statistically higher than the national rate.
In 2016, East Baton Rouge Parish overdose deathsexceeded motor vehicle deaths and equaled homicidedeaths.
In 2013, Louisiana ranked first in opioid prescribing.
Hedegaard H, Warner M, Miniño AM. Drug overdose deaths in the United States, 1999–2016. NCHS Data Brief, no 294. Hyattsville, MD: National Center for Health Statistics. 2017.2018 Environmental Scan, American Hospital Association, October 2017Frequently Asked Questions about Opioid Prescribing, Louisiana Department of Health, Sept 2017
Chronic care management
Source: Robert Woods Johnson Foundation. Chronic care: making the case for ongoing care. February 2010.
The number of Americans with chronic conditions is rapidly rising
(number in millions)
118125
133141
149157
164171
Chronic care management
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Social Determinants Of Health
Nutrition:• Nearly 40% of
American
adults are obese.
• 24% have at least one
diet related medical
condition.“Top health industry issues of 2017: A year of uncertainty and opportunity,” PWC’ Health Research Institute, December 2016
ConsumerismNew economics of health care
• Consumer expectation− What are they going to pay?− What are they going to get?
• Care on demand…convenience− Same day appointments− Walk-on care− ED fast tracks− Home visits or house calls− Patient portals or telehealth
• Episodic to continuous engagement• Pricing transparency• Managing and/or embracing the
“disruptors”…patient loyalty• Subsidizing social goods
Consumerism
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Consumerism
Wednesday, February 15Naval Heritage Center
9:30 AM
New economics of health careManaging and/or embracing the “disruptors” New technology shaping
traditional provider roles: Precision medicine
Artificial intelligenceMore than 90 start-ups are working on artificial intelligence applications in health care.
New entrants into the health care delivery system: CVS
Amazon
“…we have 10,000 new front doors to the health caresystem…”Aetna Chairman and CEO Mark Bertolini
Disruptive Innovation
2018 AHA Environmental Scan
According to health care executives, clinical leaders and clinicians, Health care sectors most in need of disruptive innovation:• Hospitals and health systems (65%)• Health care IT (47%)• Primary care (36%)
• Next-generation gene sequencing• 3-D printing of medical devices• Immunotherapy• Artificial Intelligence• Point-of-care diagnostics• Virtual reality• Leveraging social media to improve
patient experience• Biosensors and trackers• Convenient care• Telehealth
“New Marketplace Survey: The Sources of Health Care Innovation,” Insights Report, NEJM Catalyst, Feb. 16, 2017
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The Future
• Some of us will focus on population health
• Some of us will focus on important traditional services
• Some of us will focus on developing new care models as we move from fee-for-service to fee-for-value
• Many of us will do all of the above
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The Future
• All of us will be seeking strategic partners
• All of us must focus on protecting and perfecting the “core:” Attaining a more favorable cost position;
Achieving solid hospital-physician and other forms of clinical alignment;
Measuring, reporting and delivery on superb outcomes;
Developing innovative care models; and
Making care more convenient…“reducing friction”
Leadership in Uncertain Times
• Stay connected to your purpose– Be good community stewards– Quality, patient safety and high performance is job #1
• Be courageous and see what lies around the bend– Assess the harsh realities– Ask the right questions– Shift! Look for new solutions
• Count on your team– Governance, management
and clinicians
- Build new relationships• Celebrate and tell the story
Moving upstream
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