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Healthcare Reform &
Disruptive Innovation
Oxymoron or
We Told You So?
Charles Ingoglia, Vice President,
Public Policy, National Council
Dale Jarvis, Managing Consultant,
Dale Jarvis and Associates
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Last Year at the ACMHA Summit
we predicted the following…
> Federal Healthcare reform will trigger
dramatic changes in how health and
behavioral health services are
organized and funded
> These changes will create a tipping
point in how the healthcare needs of
persons with serious mental illness
and the behavioral healthcare needs
of all Americans are addressed
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If you read the newspapers and
blogs you would think we blew it with our
predictions
One in Five think the ACA has
been Repealed; Another Quarter
not Sure
KFF Health Tracking Poll,
February 2011
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This Year We’d Like to Suggest the
Following…
> Change is coming to every corner of the
healthcare ecosystem but change does
not always equal improvement
> The result will be:
• True Disruptive Innovations,
• Sustaining Innovations, and
• Disruptive De-evolution
> Depending on which state and which
part of the ecosystem you’re in
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We also Think…
> An epic battle is
unfolding between
centers of power
that benefit from a
sick care system
and
> Those that see a competitive
advantage in creating a true health care system
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Diagramming the Epic Battle
Current Resource Allocation
It’s all about Inverting the
Resource Allocation Triangle
so that:
> Prevention Activities are
funded and widely deployed
> Primary Care budgets in U.S.
are doubled
> Mental Health and
Substance Use Disorder
Services are available to all
In order to Decrease Demand in
the High Cost Specialty and
Acute Care Systems
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All things Inpatient and
Institutional
Prevention,
Primary
Care,
BH
Inpatient &
Institutional
Prevention, Early
Intervention,
Primary Care, and
Behavioral Health
Needed Resource Allocation
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Question 1: Who’s going to win this Epic
Battle (e.g. will healthcare reform really
change healthcare from a sick care system
to a true health care system)?
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Chuck and Dale’s Thought Process:
The U.S. Quality and Cost Problems
110 Preventable Deaths per
100,000
Preventable Deaths* per 100,000 Population
in 2002-2003 (19 Industrialized Nations,
Commonwealth Fund)
(* by conditions such as diabetes, epilepsy, stroke, influenza,
ulcers, pneumonia, infant mortality and appendicitis)
Per Capital Health Expenditures, 2007 (US $)
110
110
101
100
90
90
80
71 71
70
74 74
77
80
82 82
93
18 Industrialized Nations, OECD Health Data, 2010
103 103 104
96
84 84
65
60
Note: US Spending is 52% above Norway and 88% above Cana
$8,000
$6,000
$4,791
$3,853
$3,349 $3,361 $3,593 $3,792 $3,867
$4,000
$2,900
$3,353 $3,540 $3,619
$2,687
$2,729 $2,990
$2,658
$2,701
$3,000 $2,471
$5,000
$2,000
$1,000
$0
$7,285 Per Capita Health
Expenditure
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$7,285
$7,000
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Our Prediction... The Winners Will Be…
> The American Public and
American Business
> Because there are more
heavyweights being hurt
by a sick care system than
benefiting and our belief
that when “disruptive
innovation” gets rolling in
an industry, you can slow
it down but not stop it
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Question 2: If healthcare reform results in
the shift from a sick care system to a health
care system, how will this affect Americans
with mental health and substance use
conditions and the organizations that serve
them?
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The Two-Part Problem is Closely
Linked to a Third Problem
> Americans with a Serious Mental Illness die, on the average, at
age 53
> The high prevalence combined with high cost for persons with
Behavioral Health disorders, directly affect the quality and cost
problems
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Our Prediction…
> If the balance of power shifts in the way we predict, this will
accelerate:
• A growing awareness of the prevalence of MH/SU disorders and
the cost of not providing effective treatment and supports,
• Combined with parity and the increased risk accompanying near
universal coverage for the safety net population,
Triple Aim
• Combined with the an awareness that:
Better Health for the
• Behavioral Health is necessary for Health
Population, Better
• Prevention is Effective
Care for Individuals,
• Treatment Works
Reduced Costs
• People Recover
> Resulting in recognition that we cannot achieve the Triple Aim
without addressing the health care needs of persons with a SMI
and the MH/SU needs of all.
> This is already happening throughout the U.S.
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Question 3: What does Disruptive Innovation
have to do with all this, especially for the
behavioral health community?
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Let’s Start with the Definition
of Disruptive Innovation
> Clayton Christensen suggest that problems facing the American
health care system mirror nearly every other industry in their early
phases.
> Products and services in new industries “are so complicated and
expensive that only people with a lot of money can afford them and
only people with a lot of expertise can provide or use them.”
> Historically, this phase has been followed by the advent of new
methods of production and distribution that disrupt the status quo and
result in goods or services that are more affordable and widely
available to the general public.
> Often accompanied by disruptive innovator companies that become
the new market leaders, replacing the old guard.
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And Definitions of Sustaining
Innovation and Disruptive De-Evolution
> In contrast, a given business sector that has not yet been disrupted produces
a particular set of complicated and expensive products or services for a very
limited market; think of the mainframe computer or the multi-specialty general
hospital.
> Over time improvements are made in those products or services as the
leading companies compete for business; think of IBM competing with
Burroughs and UNIVAC; or the Mayo Clinic’s Centers of Excellence).
> These improvements include refinements in how the product or service is
created to increase quality and reduce costs. The most significant
improvements almost always made by industry leaders are called Sustaining
Innovations (as distinguished from Disruptive Innovations).
> We define Disruptive De-Evolution as an ill conceived change process that
results in moving backwards, not forwards. E.g. the Anti-Triple Aim: Poorer
Health for the Population, Worse Care for Individuals, Higher Costs.
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We want to explore change
that is occurring in six states
>
>
>
>
>
>
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New York Medicaid Redesign >
Vermont Blueprint for Health
Massachusetts Payment Reform
Oregon Transformation Team
Colorado Medicaid ACOs
Washington State Regional
Health Authorities
And help generate a
discussion about whether
these changes represent:
• True Disruptive
Innovations,
• Sustaining Innovations,
or
• Disruptive De-Evolution
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What all six have in common…
> The head is being
reconnected to the body
> Through different
approaches to primary
care/behavioral health
integration at the clinical,
financial and structural
levels
> The Triple Aim is a key organizing principle
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New York Medicaid Redesign
> Proposal Title: To establish interim behavioral health
organizations to manage carved-out
behavioral health services while moving
toward integrated care financing and
delivery models.
> Brief Proposal Description: Bringing in Behavioral
Health Organizations (BHOs) to manage behavioral health
services that are currently paid for via unmanaged fee for
service reimbursements and not otherwise covered under
the state's various Medicaid Managed Care (MMC) plans.
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Vermont Blueprint for Health
> Began with
clinical redesign
in 2007
> Followed by
ACO Pilots in
2008
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Vermont Blueprint for Health
> Three Single Payor Proposals Put Forward in 2011:
• Cover remaining 32,000 uninsured Vermonters
• Bring all Vermonters up to standard, essential benefit package
• Finance by a payroll contribution, with exemption for low wage
employers and workers
> Anticipated Financial Results:
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Massachusetts Payment Reform
> Recently, Governor Patrick filed HD 3590, An Act
Improving the Quality of Health Care and Controlling
Costs by Reforming Health Systems and Payments.
Proposal to radically restructure the delivery system
and behavioral health included in meaningful ways.
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Massachusetts Payment Reform
> 9-member behavioral health task force to make
recommendations on:
• The most effective and appropriate approach to including
behavioral health services in the array of services provided by
Accountable Care Organizations (ACOs);
• How current reimbursement methods and covered behavioral
health benefits may need to be
modified to achieve more cost
effective, integrated and high
quality behavioral health
outcomes; and,
Health
Health
Plan
Plan
Health
Plan
Accountable Care Organization
Clinic
Food
Mart
Specialty Clinics
Clinic
Food
Mart
Specialty Clinics
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Health
Homes
Health
Homes
Health
Homes
Hospitals
Hospitals
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Massachusetts Payment Reform
> The extent to which and how payment for behavioral health
services should be included under alternative payment methods
established or regulated under this legislation.
> Provision of a transition period from a fee-for-service delivery
model to a payment system that incorporates alternative
payment methodologies, including global payments. The goal is
to transition to alternative payment methodologies by 2015.
Publically funded programs, including MassHealth,
Commonwealth Care, and Commonwealth Choice will
implement alternative payment
methodologies and use integrated
care organizations and ACOs by
January 1, 2014.
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Oregon Transformation Team
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Colorado Medicaid ACO Implementation
Seven Regional Care Coordination Organizations will provide:
• Medical management, particularly for medically and behaviorally
complex clients, to ensure they get the right care, at the right time
and in the right setting;
• Care-coordination among providers and with other services such as
behavioral health, long-term care, SEP programs and other
government social services such as food, transportation and
nutrition; and
• Provider support to include assistance
with care-coordination, referrals,
clinical performance and practice
improvement and redesign.
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Washington Regional
Health Authorities
Current “Wiring Diagram”
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But What About ACOs for Persons
in the Safety Net Population?
Accountable Care Organization
Accountable Care Organization
Food
Mart
Clinic
Medical Specialty Clinic
Food
Mart
Clinic
MH/SU Specialty Clinic
Social Service
Agencies
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Health
Home
(PC Clinic
with MH/
SU)
Employment,Education
Health
Home
(MH/SU
Agency
with PC)
Public Health,Housing
Healthcare Neighborhood
Hospital
Hospital
Oral Health, Long
Term Care, etc.
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Regional Healthcare Authority
Key WA Idea
Community Planning
Group
Health Planning
Regional Health Authority
Promote two organizing
efforts:
> Organizing the delivery
system to create
accountable systems of
care
> Organizing the payors of
all safety net services to
create a supportive
payment and regulatory
system
Funding
Health Plans
RSNs
Management
Accountable Care Organizations
Food
Mart
Clinic
Specialty Clinics
Food
Mart
Clinic
Delivery
System
Specialty Clinics
Person
Person
Centered Centered
Health
Health
Care
Care
Homes
Homes
Social Service
Agencies
Housing
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County
and
Tribal
Services
Hospitals
Hospitals
Employment/
Education
Public Health Etc.
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Final Thoughts on the
Implications for Behavioral Health
> We guarantee we are all moving into a period of disruption
> This is going to be hard stuff
> Behavioral Health won’t automatically be included
> BH stakeholders need to develop the value proposition
> And we will likely have to ask to be involved
> This will require thinking and acting differently
> And what unfolds will depend, to a large degree, on what
the people in this room do over the next 18 months
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