October 13, 2010
3:15 – 4:15 pm
Insights on Accountable Care Organizations
Jack Friedman, Chief Executive Officer,
Providence Health Plans
John Fletcher, Senior Vice President/Chief Executive,
WA/MT Region, Providence Health & Services
Lead Sponsors
Cogdell Spencer ERDMAN and
Davis Wright Tremaine LLP
CEO Lessons for ACOs
The Road to ACO
WSHA Annual Meeting
October 13, 2010
Jack Friedman
Chief Executive Officer
Providence Health Plans
PHP at a Glance
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•
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25 years old
Part of PH&S
380K members/800K customers
$1.2 billion
Commercial, ASO, Individual, Medicare,
Medicaid, PPO Network, Work Comp
• HMO for Govt programs
• EPO/POS for commercial markets
• Proprietary network in Oregon/SWW
Traditional Medicare Badly Broken
• Poor primary care access
• Runaway utilization in unmanaged
market
• Significant regional cost variation
(Dartmouth, Gawande)
• Declining reimbursement
• Boomers looming
• Quality largely unknown
Why is Providence Looking
at ACO’s?
• FFS Medicare dying
• FFS Medicaid untenable
• Risk for population better $ than
government FFS
• All payors reducing hospital days & ED
visits
• Global budgets coming
• Prepare for commercial insurance
exchange
Essential Elements of Successful
ACO
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•
•
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•
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Strong primary care base
Aligned incentives
Kick ass medical director
Predictive modeling software
Disease and case management
Enlightened MD leaders
Providence Medicare Inpatient Admissions per 1000
Relative to Milliman Benchmarks
FFS
350.0
330.0
310.0
Providenc
e Medicare
290.0
270.0
250.0
230.0
210.0
190.0
170.0
2007-1
2007-7
2008-1
Providence Admits Per 1000
Well Managed
FFS Medicare
2008-7
2009-1
2009-7
Mod Managed
Loosely Managed
Linear (Providence Admits Per 1000)
2010-1
2010-7
“… a connected experience of care,
built
on a foundation of clinical
excellence.”
Innovate
Standardize
Connect
(Change the way we work)
(Elim. unnecessary variation)
(Systems & Structures)
How we’ll
measure
success …
A few
specific
initiatives
Clinical
Transformation
- New models of care:
joint & lower back pain,
palliative care
- Appropriate use
criteria: coronary
revascularization,
spine surgery,
- ‘Triple Aim’ measures
Medical
Home
New
Financing
Models
- Advanced Access
- Behav. Health integration
- Care Transitions
- Chronic disease mgmt
- Specialty & primary
care collaboration
Physician
Integration
- Ministry-wide
financial reporting
- PH&S populationbased financing pilot
- CMS ACO
demonstration site
- New pymt. models
with other payors
Improve Health
i.e. Evidence based chronic care
mgmt i.e. Patient perception of
health
i.e. Mortality / 30 day readmissions
- MDs into decision
making structures
- Physician
leadership dvlpmt
- Common clinical
outcome metrics
- Grow employed
primary care
More Affordable
i.e. Premium increase at CPI + 2%
i.e. % of Fee for Service declining
i.e. % decrease in Type 1 & 2 ED
visits
Your
Division’s
Priorities …
Single
Information.
Platform
- Epic
Implementation
- Single customer
contact center
business plan
- Integrated data
reporting
capability
- Your work to
innovate,
standardize and
connect …
Best Experience
i.e. Patient activation measures
i.e. Levels of shared decision
making
i.e. Measure across continuum
Strategy Map
How we
will get
there …
Where we
are
headed …
Transformation work is
central to our system’s strategy
Beneficiary Premiums
Stable Over Time
$110.00
$100.00
$90.00
$80.00
$70.00
$60.00
$50.00
$40.00
$30.00
$20.00
$10.00
$0.00
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Providence Premiums
Medicare Part B
Physicians Rewarded for Quality
and Effectiveness
• Physician base
pay is 115% of
Medicare
Portland Area
200%
% of Traditional Medicare
180%
– Quality and
performance
incentives have
increased
payment to
average 137%.
160%
140%
120%
100%
80%
• Hospitals base
pay is 100% of
Medicare with
incentives around
105%.
60%
40%
20%
0%
2003
2004
PCP
SPECIALIST
2005
2006
WEIGHTED AVERAGE
2007
Skate to Where the Puck is
Going to Be
• Vertically integrated systems best prepared for
future
• FFS gives way to population health management
• Providers must be rewarded for waste elimination
• Disease and Case management win the day
• Paid by accountable lives, not units of service
• MDs lead the new organizations
“Expect to take on more financial risk and to be held
accountable, clinically and economically, for what
happens across the continuum of care—whether we
‘own’ the continuum or not.”
—Michael Sachs, Chairman and CEO, Sg2
Reflections from Mike Leavitt
• Do You (Read: Us) Understand the
Scope and Intensity of these Reforms?
• Can You Live on Medicare Rates?
• Are You Preparing for Medicaid
expansion
• What Markets Will You Serve (Busses,
Taxis, Limos)
• What is Your Insurance Exchange
Strategy