Healthcare Innovations:
Trends, Transitions, Technology, and Talent
Ricardo Martinez, MD, FACEP
Chief Medical Officer
North Highland Company,
North Highland Worldwide
It Starts…
• Care given at home
• People paid out of their pockets directly
• Hospitals largely for poor or travelers without a home
-run by charities and religious orders.
• Physicians started many of today’s hospitals to deliver
advances in medicine.
• In the 1920-30’s, health insurance started by hospitals
and doctors to help people pay for hospital and physician
care.
• Then…
...it went nuts.
Putting the “Fun” in Dysfunction….
Common Characteristics of Current Healthcare System
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Expensive, with hidden prices
Activity-based rather than performance
Fragmented and uncoordinated
Insular
Difficult to access and to use. Not user-friendly
Inefficient
Ineffective
Highly variable
Autonomous and insular thinking
Slow toFailure
adopt –
and
change Demand For Improvement
Market
Widespread
What is Innovation?
Innovare; "to renew or change”
Steps to Innovation
• Curiosity
• Discovery
• Invention
• Innovation
The Nature of Innovation
• Unique, not just new.
• Must be definably
valuable
• Must be worthy of
exchange – of time,
money or effort
Four Types of Innovation
• Transformational
– A paradigm shift that changes
society
• Category
– Building new industry within
transformation
• Marketplace
– Builds or expands markets, reach
new customers
• Operational
– Redesign to improve business
processes and customer experience
The Innovators Dilemma
• Great companies fail for
doing the right things.
• Too much emphasis on
current customer needs
and fail to adopt new
technology or business
models
• Stuck in a value network
• Examples: computers,
steel minimills
• Healthcare?
The Big Trends
• Financial
• Social
• Technological
• Political
Market drivers toward Value Based Care =
Quality/Costs
Positioning Enterprises for Success.
Drivers of HealthCare Trends
Current
• Responds when patient need
arises
• Centered around provider
practice and schedules
• Independent practices
• Highly variable practice
• Systems designed for
commercial rates to be
profitable
• Large administrative burden
• Volume-based
• High utilization = revenue
• Margins dependent upon
reimbursement
• Patients finds access points
and navigates fragmented
system
Financial
• Limited Reimbursement
• Financial Risk Sharing
• Consumer as payment
source
Social
Health Reform
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Consumerism
Aging population
Chronic Disease
Shortage of staff
Activity-Based Care Fading Away
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Increased Medicaid
Insurance and Data
Exchanges
Payment reform
Technology
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Rapid growth health IT
Mobile devices
Telehealth
Cloud and exchanges
Future
• Identifies unmet needs and
responds proactively
• Centered around patient
needs and schedules
• Integrated network
• Highly repeatable practice
• Systems designed for
Medicaid rates to be profitable
• Frictionless healthcare
• Value-based
• Utilization = costs
• Margins dependent upon
costs
• Patients ushered to
appropriate access point and
navigated thru integrated
health system
Value-Based Care Rapidly Emerging
Healthcare enterprises must change or die.
Financial Crest
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Reimbursement peaking
Move toward “Pay for Value” – Quality/$$
Shift away from high fixed costs
Move toward risk sharing models
Greater scrutiny from payers and public
Growth of defined contribution benefits
Increasing patient co-pays makes them a
payer source
• Value-based insurance design
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Building capability
requires a phased approach
Provider Reimbursements
Road Map of Future Shifts in Reimbursement Models
Phase 1:
Foundational
Phase 2:
Enhanced
Current
State
Decrease
Costs
Fee for Service
Discounted
Phase 3:
Advanced
Decrease
Costs
Bundling / Episodes
Reimbursement Model
Decrease
Costs
Capitation Scheme
Just cut the fat out and you’ll be fine…
Social Waves
• Aging of population
• Growth of chronic diseases
• Shortage of physician and healthcare
workers
• Increasing consumerism
• Shift from Independence to
Interdependence [Systems Thinking]
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I think I’m going Japanese…
Source: The Economist: Into the Unknown. November, 2011
http://www.economist.com/node/17492860
http://socioecohistory.wordpress.com/2010/05/18/japan-the-sleeping-sovereign-debt-crisis-giant/
Growth of Chronic Disease
• 5% of population accounts for ~ 50% of total health
expenditures
• The 15 most expensive health conditions account for 44%
• 25% of US have one or more of 5 major chronic conditions
– Mood disorder, diabetes, heart disease, asthma, hypertension
• Rise in population treated with 7 of top 15 conditions,
rather than rising treatment costs per case, accounted for
greatest part of spending growth.
• And obesity continues to climb – which causes
hypertension, diabetes, heart disease and hyperlipemia.
Shortage of Physicians
and Health workers
• US has 3 specialists for each generalists, the
inverse of other countries.
• Geographic maldistribution of healthcare
resources
• Leads to difficulties and delays in access to care
• Each state has different laws on scope of
practice of various
• Will only get worse
Shift From Independence
to Interdependence
• Started in the US in the 1960’s
• Systems Thinking accelerated with The 5th
Discipline, 1990’s
• Most other industries adopted and
“reengineered”
• Relatively new concept to Healthcare
• Physicians taught autonomy often without
skills needed for success in systems.
Increasing Consumerism
• Want more control and choice in health
relationship
• Desire more convenient access to care
• Think they own their medical information
• Increasingly cost conscious
• Can collaborate with others with the same
disease
• Want access to medical information
• Desire personalized experience
Technological Waves
• Rapid growth and implementation of
Health IT across healthcare allows
capture and exchange of clinical data.
• Expansion of wireless broadband
increase flow of information
• Rise of digital sensors and imaging that
can provide information and be shared
• Boom of mobile devices for collaboration
and information retrieval, including
consumers.
https://www.ecri.org/Documents/Secure/Health_Devices
_Top_10_Hazards_2013.pdf
What is the “Road Ahead” ?
 Patient-centered,
physician-directed teams
 Value-driven: high quality
at lowest cost
 Connected and integrated
– culturally and digitally
 Delivers measurable
quality health care
(meaningful metrics,
dashboards)
 Data-driven performance,
with Business Intelligence
– constantly learning
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Opportunity Knocks.
Maintaining Margin
Depends on Lowering Costs
Road Map of Future Shifts in Reimbursement Models
Phase 1:
Foundational
Phase 2:
Enhanced
Current
State
Decrease
Costs
Phase 3:
Advanced
Decrease
Costs
Decrease
Costs
The Medicaid Paradox
Relative Reimbursement Rates
$1.20
$1.14
$1.00
$0.89
Decrease
Costs
$0.80
$0.60
$0.60
$0.40
$0.20
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Commercial
Medicare
Medicaid
Recalibrating the system for Medicaid rates will increase margins for other payers.
Source: Hospital and Physician Cost Shift: Payment Level Comparison of Medicare, Medicaid, and Commercial Payers. Milliman. December 2008.
Controlling Cost Per Unit Service
Ways to decrease costs of care delivery:
• Provider substitution
• Diagnostic/treatment substitution
• Setting Substitution
• Process redesign:
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Eliminate steps and processes
Add missing steps and processes
Re-engineer process
Offload costs to patient and family
Cost Per Unit Service Concept
Progressive strategies build
in a cost-effective manner
“Value” requires matching patient need
with the lowest cost access point…
Care Continuum
Ambulatory
Surgery
Center
Cost of Care
Ease of Access
Consistent Quality and Connectivity / Culture
…while maintaining consistent quality
Hiring the Patient
• Patient Empowerment and Activation
– Self-monitoring and feedback “self
quantification” – Nike?
– Patient health portals, shared with caregivers
– Healthcare Gamification
– Home testing and diagnostics
– Disease-specific communities of care
– Decision support
– Informed Consent
Redesigning the Process
And Patient Experience
• Delivery process re-engineering
– RFID, Real-time Locations Systems, Kiosks
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Care Coordination across spectrum
Care Navigators and health coaches
Focused factories and value streams
Health malls
Cost transparency
Patient compliance tracking
Setting substitution
• Home diagnostics, with wireless
connectivity
• Retail clinics, expanding into chronic care
• Urgent care, tightly affiliated with networks
• Telemedicine/teleheath
• Hospital At Home programs for >100 DRGs
• Home-based chronic care
• Online/email consultations
Diagnostics/therapeutics
substitution
• Utilization management programs
• Consumer decision-support and Intelligent
Virtual Assistants
• Online/telemedicine
– Behavioral health, neurology, wound care,
cardiology, chronic care, EM
• Decentralized lab and testing - POC
• Computer-guided diagnostics
• Sleep testing and therapy
Provider Substitution
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Generalist over Specialist – Medical Home
MLP or Associate Provider over MD
Nurse over Associate Provider
LPN over Nurse
Tech over LPN
Community Worker over Tech
Do it yourself
Emerging
• Big Data – drowning in it
– “Money Ball” Analytics
– Predictive Modeling
– Integrated dashboards
• Cloud-based solutions
• Crowd sourced solutions and epi
• Computer-assisted diagnostics
These interconnected competencies
drive successful transformation.
What “talent” attributes are needed now?
• Leadership
• Teamwork
• Systems thinking
Three Generations of Reform
In The Road Ahead…
Leadership Counts
Thanks!!
Ricardo.Martinez@northhighland.com
404-975-6192