ConvUrgent Care
Strategy Symposium
Orlando
1/24/12
Brian Klepper, PhD
Excess
Utilization and
the Employer
Revolt
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 1
Mis-Aligned Incentives
When an employer sits down with his health care
relationships – broker, health plan, doctor, hospital,
drug and device company – everyone else in the
room wants health care to cost more, and they’re
all positioned to make that happen.
Lynn Jennings, CEO
WeCare TLC, LLC
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 2
Unrelenting Health Care
Cost Growth
and the
Potential
for
Structural
Failure
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 3
Average Annual Health Insurance Premiums and
Worker Contributions for Family Coverage, 2009-2011
$13,375
$13,770
$3,515
$3,997
$9,860
$9,773
2009
2010
$15,073
$4,129
Worker Contribution
Employer Contribution
$10,944
2011
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2009-2011.
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 4
Cumulative Increases in Health Insurance Premiums, Workers’ Contributions
to Premiums, Inflation, and Workers’ Earnings, 1999-2011
Premium has grown
4x inflation for more
than a decade.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits,
1999-2011. Bureau of Labor Statistics, Consumer Price Index, U.S.
City Average of Annual Inflation (April to April), 1999-2011; Bureau
of Labor Statistics, Seasonally Adjusted Data from the Current
Employment Statistics Survey, 1999-2011 (April to April).
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 5
5% Drop in Employer Coverage 3 Years
11/11/11 – Gallup/Healthways Survey of 90,000 American Adults
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 6
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 7
Health Care’s Growing Burden on Federal Budget
Crowds Out Other Needs, Like Education and
Infrastructure Replacement
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 8
Here’s Health Care’s Percentage
of the Larger Economy Over Time
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 9
An Inconvenient Truth
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 10
Unnecessary/Inappropriate Care & Cost
“Our research found that wasteful spending in the health
system has been calculated at up to $1.2 trillion of the
$2.2 trillion (54.5%) spent in the United States.
[R]edundant, inappropriate or unnecessary tests and
procedures [were] identified as the biggest area of excess,
followed by inefficient healthcare administration and the
cost of care necessitated by conditions such as obesity,
which can be considered preventable by lifestyle changes.”
The Price of Excess
PricewaterhouseCoopers, 2008
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 11
Perspective
• In 2012 dollars, 54.5%
of health care spending
providing no value
would equal almost
$1.5 trillion annually.
• Congressional Super Committee was charged
with identifying/saving $1.2 trillion over 10
years. (They failed.)
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 12
The Inescapable Conclusion
Health Care’s Excesses Threaten
the Stability of Our Industry
and the Larger US Economy
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 13
Regulatory
Capture
Health Industry Lobbying
& The AMA’s RUC
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 14
Lobbying & Health Care Policy
"A person can reach no other conclusion than this is a quid
pro quo [this for that] activity.“
Lobbyist for Public Citizen
• In 2009 (during the reform proceedings), health care
organizations spent $1.3 billion to lobby Congress.*
• 3,330 lobbyists participated: 6 for every member of
Congress.*
This means policy is developed to favor the special
rather than the public interest.
*Open Secrets. The Center for Responsive Politics
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 15
By Design: The AMA’s RUC and Payment
• Relative Value Scale Update Committee (RUC)
• Voluntary, Sole Advisors to CMS on Medical
• 29 Physicians - 27 Specialists And 2 PCPs
• CMS’ Sole Advisors On Medical Services Valuation
• Commercial Health Plans Follow Medicare’s Payment Lead
• Secret Proceedings, Sham Survey Methods, Composition
Unrepresentative of Physicians in Market, Financially
Conflicted
• CMS Has Historically Accepted 90+% Of Recommendations
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 16
Real World Impacts of RUC Influence
• Over-values specialty services while under-valuing PC
• Inhibits PC’s moderating influence and accountability
function over specialty services.
• Creates systemic incentives to perform more services, and
more expensive services. (Specialists “practicing to the
codes.”)
• Payment disparities between PC and specialties. Crisislevel PC shortage now.
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 17
Payment Disparities
• Compare Primary Care Office Visit (99214) and Cataract
Extraction with Intra-Ocular Lens Implant
• 99214 – 25 Minutes and 3 Different Problems. Could be
anything. Palette is all medical knowledge. Medicare pays
$111.36
• Cataract Extraction & Intra-Ocular Lens Implant – 15 minutes.
Restores sight! 50 year old procedure. Very low risk. Handled
repetitively, factory-style. Medicare pays $836.36.
• Hourly rate of Ophthalmologist pay is 12.5x PCP pay.
• PCP’s job is arguably more complex/challenging.
Klepper & Kibbe, Rethinking the Value of Medical Services, Health Affairs Blog, 8/1/11.
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 18
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 19
Pt. Volumes – Primary vs. Specialty Care
• Typical 2012 Established Primary Care
Office Visit Duration = 7.5-12 min.
• 30 Years Ago, It Was 20-25
• PCPs Paid By Visit, So Refer Many Time-Consuming
Problems
• Most Specialists Profit From Procedures
• Result: Huge Increases in Specialty Visits, OutPt.
Diagnostics, Procedures
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 20
Procedural Volumes
• Lucrative Procedures Encourage Specialists
To “Practice to the Codes.”
• Physicians Who Own Advanced Imagers Order
Them Up To 6x More Than Those Who Don’t
• Stents Are No More Effective Than “Optimal Drug
Therapy” and Lifestyle Changes, and They
Introduce Significant Risk/Cost. Medicare Spends
$1.6 billion annually on Drug-Eluting stents.
• Endless Examples of Unnecessary/Inappropriate
Procedures, Encouraged By Payment
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 21
Health Plans & Primary Care
Question
If More Empowered Primary Care Is Proven
To Save Money, Why Don’t Health Plans Pay
PCPs To Practice That Way?
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 22
Winners & Losers
• Winners
• Nearly Everyone in the Health Industry (Except
Primary Care)
• Losers
• Patients – Unnecessary Care and Risk
• Purchasers (Employers, Taxpayers, Individuals) –
Immense Unnecessary Cost
• Primary Care Physicians
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 23
Major Health Care Structural Flaws
• Fee-For-Service Reimbursement
• Lack of Pricing/Quality/Safety Transparency
• Subjugation of Primary Care
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 24
Will Employers Save Us?
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 25
The Prospects Aren’t Good
• They Haven’t Meaningfully Mobilized To Date
• Health Benefits Costs Seen As An HR Rather Than A
Risk/Liability Management Function. Many Seem
Resigned.
• As We Saw Before, Those Who Can Are Fleeing
• Appears To Be No Larger Sense of Enlightened SelfInterest
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 26
The Employer’s Dilemma
“We decided to stop letting
the providers take advantage
of us.”
Jane Wolfe
Benefits Manager
Fairfield Manufacturing
Lafayette, IN
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 27
Collaboration in Lafayette, IN
• Relatively small community with high
concentration of mid-sized/large employers (e.g.,
Subaru factory, Purdue University).
• 2nd highest health care costs in IN
• Employers came together 6 years ago, pursued
clinics, changed the market.
• This can work anywhere.
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 28
Market-Based Reforms
Over the past 20 years, employers (& health plans)
have:
• Significantly increased copays for “steerage.”
• Introduced generic drugs and mail-order.
• Introduced Wellness, DM, Lifestyle Coaching
• Introduced Incentives
• Renegotiated network discounts.
• Given employees “more skin in the game.”
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 29
Market-Based Reforms
But over the past 20 years, we
mostly haven’t:
Managed the care process, like
businesses would.
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 30
Market-Based Approaches That Work
• Empowering Primary Care
• Large Case Management
• Dynamic Pricing
• Data Collaboratives
• Medical Destinations
• New Technologies (e.g., Minimally Invasive Procedures,
Genomics)
• Incentives/Patient Engagement
• Rx Step Therapies
• Lifestyle Management/Obesity Step Therapies
• Employer Leadership
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 31
Some Case Studies
• Lowes & Cleveland Clinic for Cardiac Surgeries
• Pepsico & Johns Hopkins –
• Hannaford Grocers & Singapore Hospital
• Intel & Providence Health
• CalPERS, BSC, Hill and Catholic HC West
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 32
Effective Onsite/Near-site Clinic Characteristics
• Outside FFS, So No Financial Conflicts, Incentive is for
Appropriateness
• Comprehensive Medical Management Platforms That
Incorporate Other Key Mgmt Approaches and Influence
Care Throughout The Continuum.
• Strong Incentives For Participation. Free Visits, Drugs, Labs.
Capture Them, Engage Them, So You Can Manage
Anywhere In The System.
• Provable, Significant Savings. Based on hard data, not soft,
productivity estimates.
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 33
Onsite/Nearsite Clinics – Financial Impact
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 34
Onsite/Nearsite Clinics – Competitive Advantage
Savings Grow Over
Time, and Create
Competitive
Advantage
Illustrative Only
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 35
Acting In All Our Interests
Health Care Organizations Comprise 1/6 of the
US Economy and 1/10 of Our Jobs.
Only One Group is Larger, With the Influence to
Overpower Health Care in Policy:
The Non-Health Care Business Community
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 36
What Employers Must Do
• Re-Assess Your Health Care Relationships. Stop Assuming That
Health Care Organizations Put Your Interests First
• Follow The Evidence. Institute Value-Based Approaches That Are
Proven To Reduce Cost While Improving Quality/Population
Health Status
• Collaborate With Other Employers on Health Management
Approaches That Work So That You Change The Market.
• Advocate. With Other Employers, Pressure Policy Makers To
Develop Health Policies That Are In The Interests of You, Your
Employees and Their Families.
Payment Reform Is Paramount!
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 37
Brian R. Klepper, PhD
is a health care analyst, industry advisor and commentator. He is Chief Development
Officer for WeCare TLC, LLC, an onsite primary care clinic and medical management firm
based in Longwood, FL and Managing Principal of Healthcare Performance Inc., a
consulting practice based in Atlantic Beach, FL.
An active author and speaker, Dr. Klepper has provided health care commentary to CBS
Evening News, the Wall Street Journal, the New York Times, and the Washington Post. He
has published articles on Kaiser Health News, Medscape, Healthleaders, The New England
Journal of Medicine, Modern Healthcare, Business Insurance and newspapers nationally.
In December 2010, he founded and now edits Care & Cost, an online professional health
care magazine and forum. In February 2011, he founded Replace the RUC!, an effort
focused on the most important driver of inappropriate health care cost. He is a regular
columnist on the Health Affairs Blog, and other expert health care blogs.
Brian is a Committee Chair on the recently convened American Academy of Family
Physicians’ Primary Care Services Valuation Task Force, and a reviewer for Health Affairs
and The Journal of Ambulatory Care Management. He serves on the Boards of the
Lundberg Institute and the Consortium for Southeast Hypertension Control (COSEHC),
dedicated to translational medicine for vascular disease. He is an Advisor to the PatientCentered Primary Care Collaborative, which advocates for medical homes, and the Center
for Value Health Innovation, which helps business identify and implement approaches that
have been proven to improve quality and safety while reducing cost.
Contact Brian at 904.343.2921, bklepper@gmail.com.
Brian Klepper, PhD
ConvUrgentCare Strategy Symposium, Orlando
Page 38