The US Health Care System is too expensive, wildly variable, with

The Changing Market
Over the past 6-8 months, there has been
significant movement in the healthcare
market, both nationally and locally
• Supreme Court upholds the
Affordable Care Act
• Medicare Shared Savings
Program launches,
increasing proliferation of
ACOs nationally and in
North Carolina
• Market consolidation across
providers, payers, and
enablement companies
continues to move forward
Summary of the Supreme Court Ruling
• The individual mandate
is unconstitutional
• The associated penalty
for not buying insurance
is constitutional
• The expansion of Medicaid
is constitutional, but the
threat to terminate existing
Medicaid is not
The Supreme Court’s decision to uphold the
ACA reinforces strategic activities underway
across sectors of health care
Continued shift to
retail and
• Public exchanges set
to open in 2014
• Private exchanges
are taking root
• Employers will look
to defined
contribution models
Continued migration to
value based models
• CMS funding and
reforms will continue
to stimulate the shift
to Fee for Value (FFV)
• The value-based
trend has developed
momentum with
commercial insurers
and employers
• Budgetary pressures
will force
governments to find
innovative ways to
control healthcare
transformation of
healthcare to an
information business
• PPACA (along with
the earlier 2009
stimulus bill) have
already funneled
billions into EMRs;
adoption rates are
past a tipping point
• New business
models built around
enablement services
are emerging, and
will fundamentally
change the
Through MSSP and private sector activity,
the shift to Accountable Care arrangements
is now in progress across the country
U.S. Primary Care Markets with Access to ACOs
Over 40% of the US population lives in markets with at least one ACO
Within the North Carolina market, there are several organizations
beginning the move to value
Simultaneously, market consolidation
among providers, payers, and enablement
companies has continued
Consolidation is a rampant trend across the healthcare marketplace
• Reports of hospital acquisition of physicians come out almost daily
• Hospital consolidation is also a growing trend
• Payers and enablement companies are also becoming increasingly more involved in these transactions
• DaVita, a leading provider of kidney care
services, acquired HealthCare Partners for
$4.42B. 1MM patients under management
• WellPoint acquired CareMore, a
senior care provider group, for
• Highmark acquired West Penn Allegheny
Health System for ~$400MM
• Independence Blue Cross, Highmark,
Horizon, and Lumeris acquired NaviNet,
the country’s largest real-time
communication network for physicians,
hospitals, and health insurers, for an
undisclosed amount
• Carolinas HealthCare System took over
management of Moses Cone Health System
for in a deal with undisclosed terms
• WellPoint acquired Amerigroup Corp, a
provider group focused on the Medicaid
population, for $4.46B
• BCBS Michigan, WellPoint, and HCSC
invested in Bloom Health to create a
national private exchange
The U.S. Health Care System is too expensive, wildly
variable, with lower than desired quality and outcomes.
Here is where we are headed:
• There will be continued downward pressure on
health care providers to control costs while
improving quality of care provided.
• Fee-for-service reimbursement will be continually
subject to reductions in fees, external efforts to
control utilization, and scrutiny of care provided.
• Favorable reimbursement will be shifted to those
providers able to demonstrate value through
providing high quality care at the lowest cost.
The healthcare delivery system model will change
across several key dimensions
Volume Based
Value Based
 No payment for readmits,
never events, etc.
 Outcomes & Quality based
 Global payments
 Departmental
 Populations
 Conditions
 Focused factories
Value drivers
 Volume
 Efficiency (on a procedure
 Quality and low variability
 Efficiency (on a population
Profit pools
 Visits
 Surgery / Procedures
 Outpatient ancillary
 Wellness and prevention
 Population management
 Chronic condition
 Capacity
 Revenue-producing assets
 Patient referrals
 Health IT
 Clinical integration
 Commercialization