Marketing and Planning
Leadership Council
Health Care Industry
Trends 2015
Ready-to-Use Presentation Slides
2
Road Map
1
Payment Reform
2
Provider Market
3
4
Purchaser Behavior
©2014 The Advisory Board Company • advisory.com
Provider Selection Trends
3
Payment Reform
•
Overview of Accountable Payment Models
•
Update on Value Based Purchasing Program
•
Update on Bundled Payments
•
Update on Accountable Care Organizations
4
Overview of Accountable Payment Models
Overview of Accountable Payment Models
Value-Based
Purchasing
Key Attributes
Definition
Purpose
Pay-for-performance program
differentially rewards or punishes
hospitals (and likely ASCs and
physicians in coming years)
based on performance against
predefined process and outcomes
performance measures
Accountable Care
Organizations (ACOs)
Purchaser disburses single
payment to cover certain
combination of hospital,
physician, post-acute, or other
services performed during an
inpatient stay or across an
episode of care; providers
propose discounts, can gain
share on any money saved
Network of providers collectively
accountable for the total cost and
quality of care for a population of
patients; ACOs are reimbursed
through total cost payment
structures, such as the shared
savings model or capitation
Create material link between
Incent multiple types of providers
reimbursement and clinical
to coordinate care, reduce
quality, patient satisfaction scores expenses associated with care
episodes
Withhold-earn back model will put
significant dollars at risk for all
providers, force immediate focus
Advisory Board
on quality and experience metrics
Assessment
Role of CMMI1
Bundled
Payments
Dedicating $500M to Partnership
for Patients, targeting hospitalacquired infections, readmissions
Reward providers for reducing
total cost of care for patients
through prevention, disease
management, coordination
Increases accountability for cost
and quality within episodes of
care without removing FFS
volume incentive; new lever for
financial alignment between
independent specialists and
hospitals
Long-range goal of CMS to
migrate to risk contracting; will
spark industry-wide investment in
primary care infrastructure to
establish narrower networks
Accepting providers’ proposals to
test four different bundled
payment models, including one
without inpatient care
Accepting providers’ proposals to
test various payment systems,
including both shared savings and
partial capitation
1) Center for Medicare and Medicaid Innovation.
©2014 The Advisory Board Company • advisory.com
Source: Marketing and Planning Leadership Council interviews and analysis.
5
Update on Value Based Purchasing Program
CMS Adds Efficiency Metric to VBP Program
Initially Weighted at 20%, Reducing Clinical Process Weight
Medicare VBP1 Program Domain Weights
20%
45%
70%
©2014 The Advisory Board Company • advisory.com
Clinical Process
25%
Patient Experience
40%
Outcomes of Care
Efficiency
30%
30%
1) Value-Based Purchasing.
10%
30%
30%
25%
20%
25%
FY 2013
FY 2014
FY 2015
FY 2016
Source: The Advisory Board Company, “Mortality Rates Are Only One of Many VBP Changes
to Come,” December 4, 2013, available at: www.advisory.com; CMS, “Request for Information
on Specialty Practitioner Payment Model Opportunities,” February 2014, available at:
www.innovation.coms.gov; Health Care Advisory Board interviews and analysis.
6
Update on Bundled Payments
Over 6000 Providers Participating in BPCI1
BPCI1 Participation by State
August 2014
50-100 providers
100-200 providers
200-300 providers
>300 providers
1) Bundled Payments for Care Improvement.
©2014 The Advisory Board Company • advisory.com
Source: Centers for Medicare and Medicaid Services;
Health Care Advisory Board interviews and analysis.
7
Update on Accountable Care Organizations
Number of ACOs Continues to Grow
Total Number of Operating ACOs
May 2014
74
13
626
Widening Reach of ACOs1
210
67%
Portion of U.S. population
living in a primary care
service area with an ACO
17%
Portion of U.S.
population treated
by an ACO
306
5.3M
23
Pioneer
ACO
Model
MSSP
Cohort
Private
Sector
ACOs
1) As of April 2014.
©2014 The Advisory Board Company • advisory.com
Private &
Public
ACOs
ACOs
without
announced
contracts
Medicare FFS
beneficiaries treated
by an ACO
Total
Source: Oliver Wyman, “ACO Update: Accountable Care at a Tipping Point,” April 2014; Leavitt Partners, “Growth
and Dispersion of ACOs,” June 2014; Marketing and Planning Leadership Council interviews and analysis.
8
Update on Accountable Care Organizations
Where the Medicare ACOs Are
23 Pioneer and 343 Shared Savings Program ACOs
April 2014
Pioneer ACOs
Shared Savings ACOs 2013 Cohort
Shared Savings ACOs 2012 Cohort
Shared Savings ACOs 2014 Cohort
©2014 The Advisory Board Company • advisory.com
Source: Centers for Medicare and Medicaid Services; Health Care Advisory Board interviews and analysis.
9
Update on Accountable Care Organizations
Early Adopters Beginning to Reap Results
Physician-Led ACOs More Likely to Generate Savings
First-Year Spending Reduction
By MSSP1 ACOs
Percent of MSSP ACOs that Earned
Shared Savings by Sponsorship
2012 Cohort
2012 Cohort
25%
Did Not Reduce
Spending
Earned
Shared
Savings
29%
20%
53%
22%
Reduced
Spending But
Did Not Earn
Shared Savings
Physician-Led
$126M
$147M
Shared savings earned by 2012
MSSP ACOs in first year
Total cost savings by
Pioneer ACOs in first year
1) Medicare Shared Savings Program.
©2014 The Advisory Board Company • advisory.com
Hospital-Led
Source: Muhlestein D, “Accountable Care Growth in 2014: A Look Ahead,” Health Affairs Blog, January 29, 2014,
available at: www.healthaffairs.com/blog; CMS, “More Partnerships Between Doctors and Hospitals Strengthen
Coordinated Care for Medicare Beneficiaries,” December 23, 2013; Oliver Wyman, “Accountable Care Organizations
Now Serve 14% of Americans,” February 19, 2013; Health Care Advisory Board interviews and analysis.
10
Update on Accountable Care Organizations
Some Pioneers Dropping Out of the Program
Performance, Persistence Closely Correlated
Pioneer ACO Performance
Gross Savings as Percentage of Benchmark
7.1%
(max)
1
First-year performance
Second-year performance
Dropped out after first year
-5.6%
(min)
Dropped out after second year
1) Dropped out after second year; secondyear performance not reported
©2014 The Advisory Board Company • advisory.com
Source: Centers for Medicare and Medicaid Services, http://innovation.cms.gov/Files/x/PioneerACO-Fncl-PY1PY2.pdf; “San Diego-Based Sharp
HealthCare Pulls Out of Pioneer ACO Program,” California Healthline, August 28, 2014; Health Care Advisory Board interviews and analysis.
11
Provider Market
•
Volume Performance
•
Mergers and Acquisitions
•
Partnerships and Affiliations
•
Imaging Centers
•
Ambulatory Surgery Centers
•
Primary Care Network
12
Volume Performance
Modest Growth Anticipated for the Near Term
Inpatient and Hospital Based Outpatient Volume Projections
Inpatient Volume,
CAGR1
Hospital-Based Outpatient Volume,
CAGR1
2013-2018
2013-2018
Overall
Neurosurgery
General Medicine
Overall
0.4%
2.6%
1.3%
Oncology
1.0%
Cardiology
General Surgery
1.0%
E&M
0.5%
Cardiac Services
(2.3%)
3.1%
Radiology
Orthopedics
Neurology
1.5%
General
Surgery
Orthopedics
1.8%
1.6%
1.2%
1.0%
0.8%
1) Compound Annual Growth Rate
©2014 The Advisory Board Company • advisory.com
Source: Advisory Board Inpatient and Outpatient Market Estimators; Advisory Board research and analysis.
13
Volume Performance
Volumes Continuing to Shift Outpatient
Medicare Volume Growth
All Payer Volume Growth Projections1
Cumulative Percent Change
2013-2018
28.5%
Cardiac (11%)
Services
Vascular
Services
2006
2012
(12.6%)
11%
(3%)
16%
5.0%
Orthopedics
15%
14.0%
Neurosurgery
17%
Outpatient Services per FFS Part B Beneficiary
Inpatient Discharges per FFS Part A Beneficiary
1) Outpatient services represent entire market regardless of
site of service (includes hospital-based settings, ASCs,
other freestanding providers and physician offices)
©2014 The Advisory Board Company • advisory.com
Inpatient
Oupatient
Source: “Report to the Congress: Medicare Payment Policy,”
MedPAC, March 2014, available at: www.medpac.gov; Marketing
and Planning Leadership Council interviews and analysis.
14
Volume Performance
Medicare to Become Majority of Volume by 2022
Projected Number of
Medicare Beneficiaries
Average Inpatient Case Mix
By Volume
Millions of Beneficiaries
n = 785 Hospitals
6%
60.7
2%
25%
33%
59.0
15%
57.3
19%
55.6
58%
54.0
2014
42%
2016
2018
©2014 The Advisory Board Company • advisory.com
2020
2022
2012
2022
Self-Pay
Medicaid
Commercial
Medicare
Source: CMS, “2013 Annual Report of the Boards of Trustees of the Federal Hospital Insurance
and Federal Supplementary Medical Insurance Trust Funds,” May 31, 2013, available at:
http://downloads.cms.gov/files/TR2013.pdf; Health Care Advisory Board interviews and analysis.
15
Mergers and Acquisitions
Mergers and Acquisitions Continue to Rise
Hospital Mergers and Acquisitions
M&A Plans for the Next 12 Months1
n=189
89
95
98
2011
2012
2013
No M&A Activity
Planned
65
12%
2010
Number of Hospitals Part of a Health System
2000-2012
88%
3100
2775
2542
2626
2000
2003
1) September 2013.
©2014 The Advisory Board Company • advisory.com
2921
Planning to Pursue
M&A Within the
Next 12 Months
2006
2009
2012
Source: AHA Hospital Fast Facts, available at www.aha.org; GE Capital Survey, available at:
www.gehealthcarefinance.com; Kaufman Hall, “Number of Hospital Transactions Grew in
2013,” available at: www.kaufmanhall.com; Advisory Board interviews and analysis.
16
Partnerships and Affiliations
New Partnerships Aim at Integration Without M&A
Partnerships and Affiliations On the Rise
Large academic medical center
signs preliminary partnership
agreement with six rival
hospitals to better compete with
bigger systems
Allina and
HealthPartners affiliate
to create a “testing lab”
for accountable care
Medium-sized
academic medical
center partners with
smaller rival to fill cath
lab service deficiencies
New Hanover Regional
Medical Center,
Wilmington Health,
BCBSNC agree to
accountable care
alliance
Growth Goals for
Partnerships
• Ambulatory footprint
• Access to new
regions
• New clinical program
• Brand equity
©2014 The Advisory Board Company • advisory.com
Baylor College of
Medicine, CHI form
community hospital joint
venture to explore joint
affiliation options
Large medical center
agrees to sell CONapproved open-heart
surgery suite to
competitor
Source: The Advisory Board Company, “Cardiovascular Regionalization and Network Strategy,” Washington, DC; Baylor College of Medicine, “Bold New
Alliance Among Houston’s Leading Health Care Providers,” available at: https://www.bcm.edu/news/expansion/new-partnership-chi-stl-baylor-texas-heart,
accessed Oct 2014; BCBSNC, “New Hanover Regional Medical Center, Wilmington Health and BCBSNC Launch NC’s First Accountable Care Alliance,
available at http://mediacenter.bcbsnc.com/news/new-hanover-regional-medical-center-wilmington-health-and-bcbsnc-launch-ncs-first-accountable-carealliance, accessed Oct 2014; HealthPartners, “Accountable Care Organization,” available at https://www.healthpartners.com/public/about/accountable-careorganization/, accessed Oct 2014; Marketing and Planning Leadership Council interviews and analysis.
17
Partnerships and Affiliations
Five Major Types of Provider Partnership
Description
Merger or
Acquisition
Formal purchase of one organization’s assets by another, or the combination of
two organizations’ assets into a single entity
Clinically-Integrated
Hospital Network
Collection of hospitals contracting jointly in order to support improved
coordination, outcomes; modeled after physician CI networks
Accountable Care
Organization
Independent entity, owned by one or several independent organizations, that
accepts risk-based contracts and distributes shared savings
Regional
Collaborative
Flexible umbrella structure, often encompassing many independent
organizations of similar geography, that may serve as foundation for further
integration
Clinical Affiliation
Typically bilateral agreement to cooperate around a particular initiative or
service line; may involve local or national partners
©2014 The Advisory Board Company • advisory.com
Source: Health Care Advisory Board interviews and analysis.
18
Imaging Centers
Imaging Center Market Dips After Years of Growth
First Decline Since 2009
Total Number of Imaging Centers in the U.S.
2005-2013
7,074
Net percent
growth from
previous year
6,816
6,455
6,311
6,241
5.60%
6,383
10.80%
6,150
3.40%
2.60%
1.10%
-4.70%
2007
©2014 The Advisory Board Company • advisory.com
2008
2009
-3.60%
2010
2011
2012
2013
Source: Radiology Business Journal, “Imaging-center Growth Hits the
Wall in 2013; Volumes Plummeted in 2011,” August 30, 2013;
Marketing and Planning Leadership Council interviews and analysis.
19
Ambulatory Surgery Centers
ASC Growth at All-Time Low
Total Number of Medicare-Certified ASCs
5,357
5,291
5,203
5,111
5,001
5.9%
4.2%
4,798
2007
2.2%
2008
2009
1.8%
2010
1.7%
2011
1.2%
2012
Net percent growth
from previous year
©2014 The Advisory Board Company • advisory.com
Source: “Report to the Congress: Medicare Payment Policy,” MedPAC, March 2014;
Marketing and Planning Leadership Council interviews and analysis.
20
Primary Care Network
A Growing Network of Immediate Access Choices
Markets Responding to Unmet Needs
Consumer-Oriented Service Delivery Sites Filling the Gap
Traditional
Access
Points
Primary
Care Office
ConsumerOriented
Access Points
Low Acuity
High Acuity
Virtual
Visit
Urgent Care
Center
Retail
Clinic
Emergency
Department
Driving Provider Questions:
• Should we partner to establish retail clinics?
• Should we build or expand our urgent care footprint?
• Is virtual care something that we should provide?
• When should we enter into partnerships to meet patient demands?
©2014 The Advisory Board Company • advisory.com
Source: Mehrota A et al, "Visits To Retail Clinics Grew Fourfold From 2007 To 2009,
Although Their Share Of Overall Outpatient Visits Remains Low," Health Affairs,
August 2012; Health Care Advisory Board interviews and analysis.
21
Primary Care Network
Major Opportunity to Shift Primary Care Volumes
Redistributing Non-emergent Care to Appropriate Lowest-Acuity Sites
Visits At Risk of Shifting to Other Sites of Care
573M
103M
18% of PCP
visits could be
handled by NPs
at convenient
care sites
Non-urgent ED
visits could be
treated at urgent
care, retail or
primary care
132M
47M
Annual Visits Visits Eligible for
to PCPs
NP-Led Care
©2014 The Advisory Board Company • advisory.com
Annual
ED Visits
Non-urgent
ED Visits Shifted
to Other Care Sites
Source: CDC/NCHS, "National Ambulatory Medical Care Survey, National Hospital Ambulatory Medical Care Survey,"
2009-2010; “Primary Care Physician Shortages Could be Eliminated Through Use of Teams, Nonphysicians, and
Electronic Communication,” Health Affairs 32:1. Jan 2013. Health Care Advisory Board interviews and analysis.
22
Primary Care Network
Retail Clinics Expected to Continue Growing
Estimated Total Number of Retail Clinics in the
US
2000-20151
2868
Growth trajectory
depends on preferred
payer relations, PCP
capacity, and health
system partnerships
2243
1743
1135 1172 1220
1355 1418
868
202
2000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Retailer
Operational
Retail Clinics1
900+
1) As of Oct. 2014.
©2014 The Advisory Board Company • advisory.com
400+
135
14
75+
Source: Accenture, "Retail medical clinics: From Foe to Friend?," 2013; Ritchie J, "After a stall, Kroger could
add clinics," Cincinnati Business Courier, July 5, 2013; Robeznieks A, "Retail clinics at tipping point," Modern
Healthcare, May 4, 2013; Health Care Advisory Board interviews and analysis.
23
Primary Care Network
Providers Expanding the Applications of Virtual Care
From Administrative Transactions to Real-Time Care Delivery
Virtualize Care Delivery
• Asynchronous, messagebased visits
• Live, video-based visits
Impact on
Access
Streamline Clinical Transactions
• Prescribe new medications
• Receive lab results
• Deliver online education,
shared decision-making tools
Automate Administrative Functions
• View medical records
• Refill existing prescriptions
• Schedule in-person appointments
• Pay bill
Virtual Care Platform Function
A Fast-Emerging Market Segment
$13.7B
©2014 The Advisory Board Company • advisory.com
Estimated revenue from
virtual visits in 2018, up
from $100M in 2013
220%
Projected increase in
households using virtual
care between 2013-2018
Source: Wang H, “Virtual Health Care Will Revolutionize The Industry, If We Let It.,” Forbes, 3 April 2014;
available at: http://goo.gl/oOJOCG, accessed May 9, 2014; Health Care Advisory Board interviews and analysis.
24
Purchaser Behavior
•
Commercial Payers
•
Employers
•
Medicare
•
Coverage Expansion
25
Commercial Payers
Seeing Price Cuts On Most Exchange Plans
Anticipated Provider Reimbursement Rates for Exchange Plans
Catholic Health Initiatives
Modest discounts from
commercial rates
Millern Medical Center1
20% below commercial
rates
WellPoint Inc.
Between Medicare
and Medicaid rates
Meyers Health1
10% above
Medicare rates
Tenet Healthcare
Up to 10% below
commercial rates
Meriwether Hospital1
5% below commercial
rates
©2014 The Advisory Board Company • advisory.com
Source: Mathews AW and Kamp J, “Another Big Step in Reshaping
HealthCare,” Wall Street Journal, February 28, 2013, available at:
www.online.wsj.com; Health Care Advisory Board interviews and analysis.
26
Commercial Payers
Employer Shifting Risk by Increasing Cost-Sharing
Particularly Severe for Out-of-Network Care
Percent of Covered Workers Enrolled in a
Plan with a $1,000+ Deductible by Firm Size
Average In- and Out-of-Network
Deductibles for Group Plans
Single Coverage
n = 1,100 employers
58%
50%
46%
$2,110
49%
$1,750
$1,570
40%
$1,380
$1,230
26%
28%
22%
$680
17%
$1,010
$1,000
$940
$760
13%
2009
2010
2011
2012
Small Firms (3-199 Workers)
2013
2009
2010
In-Network
2011
2012
2013
Out-of-Network
Large Firms (200+ Workers)
©2014 The Advisory Board Company • advisory.com
Source: Kaiser Family Foundation and Health Research & Educations Trust, “Employer Health
Benefits 2013 Annual Survey,” August 2013; PwC, “Medical Cost Trends: Behind the Numbers
2014,” June 2013, available at: www.pwc.com; Health Care Advisory Board interviews and analysis.
27
Commercial Payers
Public HIX Participants Choosing High Deductibles
Annual Deductibles of Individual Plans
Selected on eHealth
October 2013 – March 2014
$3,000-$5,999
30%
39%
$6,000+
$2,000-$2,999 5%
11%
$1,000-$1,999
13%
3%
$500-$999
©2014 The Advisory Board Company • advisory.com
< $500
Source: Breakaway Policy Strategies, “Eight Million and Counting: A Deeper Look at Premiums, Cost Sharing and
Benefit Design in the New Health Insurance Marketplaces,” May 2014; eHealth, “Health Insurance Price Index
Report for Open Enrollment and Q1 2014,” May 2014; Health Care Advisory Board interviews and analysis.
28
Commercial Payers
Public Exchange Plans Mainly Narrow Network
Payers Responding to Anticipated Premium Sensitivity
Majority of Public Exchange Plans
Exclude >30% of Largest Hospitals
20 Urban Markets, December 2013
Broad
30%
38%
“Narrow”
32%
Excludes 30% of
20 largest hospitals
©2014 The Advisory Board Company • advisory.com
“Ultra-Narrow”
Excludes 70% of
20 largest hospitals
Source: Gottleib S, “Hard Data on Trouble You’ll Have Finding Doctors in Obamacare,” Forbes, March 8, 2014,
www.forbes.com; McKinsey & Company, “Hospital Networks: Configurations on the Exchange and Their Impact
on Premiums,” December 2013; Medical Group Strategy Council interviews and analysis.
29
Employers
Traditional Employer Coverage Eroding
Will Employers Maintain Coverage, and How?
Spectrum of Options for Controlling Health Benefits Expense
“Abdication”
Drop Coverage
“Activation”
Shift to Private Exchange
Convert to Self-Funding
Pros:
Pros:
Pros:
• Escape from cycle of
rising premium costs
• Responsiveness to
employee preference
• Close control over
network design
Cons:
• Predictable, defined
contributions
• Exemption from
minimum benefits
requirements
• Employer mandate
penalty
• Labor market
disadvantage
©2014 The Advisory Board Company • advisory.com
Cons:
• Disruption to benefit
design
Cons:
• Risk employees may
underinsure
• Network assembly
challenging
• Greater financial risk
Source: Health Care Advisory Board interviews and analysis.
30
Employers
Employers’ Alternatives to Providing Coverage
Several Strategies to Avoid ACA Mandate Penalties…
Cut jobs to
remain under
50 FTEs1
Convert full-time
employees to
part-time status
Hire all new
employees at
part-time status
Split into smaller
companies with
fewer than 50 FTEs
…Though Some May Consider Penalty a More Economical Option
Average Cost of 2014
Employer-Sponsored Insurance
$16,351
$2,000
Penalty per employee
for failing to provide
qualifying health
coverage
$5,884
Single
1) Full-time equivalents.
©2014 The Advisory Board Company • advisory.com
Family
Source: Herring B and Lentz LK: “What Can We Expect from the ‘Cadillac Tax’ in 2018 and Beyond?” Inquiry,
48(4):322-37; Piotrowski J et al., “Health Policy Brief: Excise Tax on ‘Cadillac’ Plans,” Health Affairs, September
12, 2013, available at: www.healthaffairs.org; Medical Group Strategy Council interviews and analysis.
31
Employers
Huge Growth Forecast for Private Exchanges
Low-Wage Employers Most Active Today, but Skilled Industries in the Wings
Potential Growth Path for Private Exchange Enrollment
40M
172
30M
19M
Private exchange
operators as of
October 2014
9M
3M
2014
2015
2016
2017
2018
Prominent Employers Using Private Exchanges
For Active Employees:
©2014 The Advisory Board Company • advisory.com
For Retirees:
(Medicare Advantage, Medigap plans)
Source: Accenture, “Are You Ready? Private Health Insurance Exchanges are Looming;”
privatehealthexchange.com; Health Care Advisory Board interviews and analysis.
32
Employers
Self-Funding Strategies Steadily Gaining Ground
Percentage of Covered Workers
in Self-Funded Plans
ACA Benefits Standards Avoidable
Through Self-Funding
70%
65%
59%
60%
54%
55%
50%
61%
Essential Health
Benefits
Guaranteed Issue
and Renewability
Modified
Community Rating
Medical Loss Ratio
Requirements
49%
45%
40%
2000
2005
©2014 The Advisory Board Company • advisory.com
2010
2014
Source: Gabel JR et al., “Small Employer Perspectives On The Affordable
Care Act’s Premiums, SHOP Exchanges, And Self-Insurance,” Health Affairs,
32(11): 2032-39; Health Care Advisory Board interviews and analysis.
33
Medicare
Medicare FFS Payment Cuts Continue
ACA’s Medicare Fee-for-Service Payment Cuts
Reductions to Annual Payment Rate Increases1
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
($4B)
($14B)
($21B) ($25B)
$415B in total
fee-for-service
cuts, 2013-2022
($32B)
($42B)
($53B)
($64B)
($75B)
($86B)
$260B
$56B
$151B
Hospital payment
rate cuts,
2013-2022
Reduced Medicare
and Medicaid DSH2
payments, 2013-2022
Reduced Medicare payments
due to sequestration and
2013 budget bill
1) Includes hospital, skilled nursing facility, hospice, and
home health services; excludes physician services;
annual reductions rounded.
2) Disproportionate Share Hospital.
©2014 The Advisory Board Company • advisory.com
Source: CBO, “Letter to the Honorable John Boehner Providing an Estimate for H.R.6079, The Repeal of Obamacare Act,” July 24, 2012;
CBO, “Estimated Impact of Automatic Budget Enforcement Procedures Specified in the Budget Control Act,” September 12, 2011; CBO,
“Bipartisan Budget Act of 2013,” December 11, 2013, all available at: www.cbo.gov; Health Care Advisory Board interviews and analysis.
34
Coverage Expansion
Majority of States Expanding Medicaid
State Participation in Medicaid Expansion
September 2014
Participating
Undecided
Will Not Participate
©2014 The Advisory Board Company • advisory.com
Source: FamiliesUSA.org, available at http://familiesusa.org/product/50-state-look-medicaid-expansion-2014;
accessed on Nov. 6; Marketing and Planning Leadership Council interviews and analysis.
35
Coverage Expansion
Public Exchange Enrollment Exceeds 8 Million
Bumpy Rollout Did Not Dampen Projections
Projected and Actual Enrollment in Qualified Health Plans
2014-2019
Unchanged despite flawed rollout
24.0M
25.0M
25.0M
22.0M
13.0M
8.0M
6.0M
2014
2015
2016
Actual Enrollment
©2014 The Advisory Board Company • advisory.com
2017
2018
2019
Projected Enrollment
Source: Radnofsky L and Nelson CM, “Obama Says Health-Insurance Enrollees Reach 8 Million,” Wall Street Journal, April 17, 2014, available at: www.wsj.com; CBO,
“The Budget and Economic Outlook: 2014 to 2024,” February 2014, available at: http://www.cbo.gov/sites/default/files/cbofiles/attachments/45010-Outlook2014_Feb.pdf;
Demko P, “UnitedHealth to Expand Exchange Presence as Profits Dip,” ModernHealthcare, April 17, 2014, available at: www.modernhealthcare.com; Cheney K and
Norman B, “Insurers See Brighter Obamacare Skies,” Politico, April 15, 2014, available at: www.politico.com; Health Care Advisory Board interviews and analysis.
36
Coverage Expansion
Individuals Gravitating Toward Leaner Plans
Metal Tiers of Plans Chosen on Public Exchanges
October 2013 to April 2014
All Enrollees
Enrollees Without Premium Subsidies
Gold
Platinum
9%
5%
2%
Catastrophic
Gold
Silver
25%
Silver
65%
20%
10%
Bronze
33%
Bronze
©2014 The Advisory Board Company • advisory.com
21%
Platinum
12%
Catastrophic
Source: HHS, “Health Insurance Marketplace: Summary Enrollment Report for the Initial
Annual Open Enrollment Period,” May 1, 2014; HHS, “Health Insurance Marketplace
Premiums for 2014,” September 2013; Health Care Advisory Board interviews and analysis.
37
Coverage Expansion
Exchanges 2015: What to Watch
Second Round of Open Enrollment Will Reveal True Dynamics
Trends to Watch:
1
Enrollment
• Are the technical glitches really fixed?
• Will higher individual mandate penalties change anyone’s mind?
• Will the young and healthy turn out in force?
2
3
©2014 The Advisory Board Company • advisory.com
Choice and Mobility
•
How will automatic reenrollment affect consumer behavior?
•
Will last year’s bargain hunters regret choosing high deductibles
and narrow networks?
•
Can plans that raise premiums maintain market share?
Market Reaction
•
How aggressively will providers court the newly insured?
•
Will employers dump workers onto the exchanges?
Source: Health Care Advisory Board Interviews and Analysis.
38
Provider Selection Trends
•
Independent Physicians
•
Patients
39
Independent Physicians
Referral Choice Criteria Different for PCPs, Specialists
Emerging and Traditional Differentiators for Physicians
The Extended Service Line Referral Pathway
Sources of Influence
PCP
Consumer
Interventions
Medical
Specialist
Proceduralist
Hospital
Traditional Differentiators
• Top-notch specialty capabilities and technology
• Superior specialist access
Value-Based
Incentives
• Operations focused on specialist efficiency
Emerging Differentiators
Steerage
Mechanisms
• Comprehensive care continuum
• Highest value of care
• Superior patient access and experience
©2014 The Advisory Board Company • advisory.com
Source: Service Line Strategy Advisor interviews and analysis.
40
Independent Physicians
What PCPs Value Most for Referrals
Referrals Hinge on Accessibility and Communication
Top Four Factors When Choosing a Specialist
Rated as Moderate or Major Importance1
n = 553
100%
96%
95%
94%
PCPs’ Referral Decision Factors
Compared to Specialists’
1.5x
PCPs 1.5 times more likely to
refer based on physician
communication than specialists
2x
Medical Skill
Appointment
Quality of
Patient
Timeliness Communication Experience
with Specialist
1) Top four factors (out of 17 options) rated by PCPs as either a
moderate or major factor in their specialty referral decision
©2014 The Advisory Board Company • advisory.com
PCPs two times more likely to
refer based on timely availability
of appointments than specialists
Source: Kinchen, KS, et al., “Referral of Patients to Specialists: Factors Affecting Choice of Specialist by
Primary Care Physicians,” Annals of Family Medicine, May/June 2004, 2: 245-252; Barnett, Michael L. et al.,
“Reasons for Choice of Referral Physician Among Primary Care and Specialist Physicians.,”Journal of
General Internal Medicine, September 16th, 2011; Service Line Strategy Advisor interviews and analysis,.
41
Patients
Market Forces Turning Patients into Consumers
Catalyzing a Shift in Network Demands
Characteristics of a Traditional vs. Retail Market
Traditional Market
Retail Market
Passive employer,
price-insulated employee
1
Broad, open networks
2
Growing number of buyers
Activist employer,
price-sensitive individual
Narrow, custom networks
Proliferation of product options
No platform for apples-toapples plan comparison
3
Disruptive for employers
to change benefit options
4
Constant employee
premium contribution,
low deductibles
©2014 The Advisory Board Company • advisory.com
Increased transparency
Reduced switching costs
5
Greater consumer cost exposure
Clear plan comparison
on exchange platforms
Easy for individuals to
switch plans annually
Variable individual
premium contribution,
high deductibles
Source: Health Care Advisory Board interviews and analysis.
42
Patients
Welcome to the Renewals Business
Patient Experience Vital For Securing Purchaser Choice Year Over Year
Network Selection and Ongoing Experience
Annual network
selection in fluid
insurance market
implies consistent
reevaluation of
network performance
Day 1
Day 365
Care Decision
Care Decision
Patient
Experience
Care
Decision
©2014 The Advisory Board Company • advisory.com
Clinical interactions
represent repeated
opportunities to
reinforce patient
preference through
superior experience
Care
Decision
Source: Health Care Advisory Board interviews and analysis.
43
Patients
Consumers’ Top 10 Primary Care Clinic Attributes
Prioritizing Convenience and Affordability
Average Utilities for Top Ten Preferred Primary Care Clinic Attributes
n=3,873
I can walk in without an appointment, and I’m guaranteed
to be seen within 30 minutes
If I need lab tests or x-rays, I can get them done at
the clinic instead of going to another location
3.98
The provider is in-network for my insurer
3.95
The visit will be free
3.94
The clinic is open 24 hours a day,
7 days a week
3.91
4.11
I can get an appointment for later today
3.70
The provider explains possible causes of my illness
and helps me plan ways to stay healthy in the future
3.04
Each time I visit the clinic, the
same provider will treat me
3.01
If I need a prescription, I can get it filled at the
clinic instead of going to another location
3.00
The clinic is located near my home
3.00
©2014 The Advisory Board Company • advisory.com
Source: 2014 Primary Care Consumer Choice Survey, Marketing
and Planning Leadership Council interviews and analysis.
44
Patients
Patient Preferences for Online Care Growing
Survey Finds Email Visits Preferred to Clinic Near Errands or Work
Preference for Location of Services
Clinic located
near work
Clinic located
near errands
Emailing provider
with symptoms
Clinic located
near the home
Increasing Consumer Preference
Young, Wealthy, Busy—Strongest Potential Telehealth Targets1
54%
49%
53%
Of 18-29 yrs olds
Of those making
>$71K per year
Of those working
>35 hours per week
1) Based on proportions of respondents interested in teleheatlh.
©2014 The Advisory Board Company • advisory.com
Source: 2014 Primary Care Consumer Choice Survey, Marketing
and Planning Leadership Council interviews and analysis.
45
Patients
Consumers Seeking Accurate Estimates
Compared to Not Knowing How Much
the Visit Costs Until Receiving the Bill:
Primary Care Consumer
Survey Results
55th
Rank, out of 56
attributes, of “not
knowing how
much the visit
would cost until
receiving the bill”
©2014 The Advisory Board Company • advisory.com
Would rather pay $100
out of pocket
Would rather pay $50
out of pocket
Would rather drive 20
minutes to the clinic
Would rather have to go
to another clinic for lab
tests, x-rays, or pharmacy
38%
74%
76%
92%
Source: 2014 Primary Care Consumer Choice Survey, Marketing
and Planning Leadership Council interviews and analysis.
Marketing and Planning
Leadership Council
Project Director
Anna Yakovenko
Contributing Consultant
Emily Zuehlke
Design Consultant
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