Transcript Growing through innovation and Integration

Strategic Outlook On Health Care From An Insurance Perspective
2008 Health Care Forecast Conference
February 22, 2008
Chip Tooke
Founder & former CEO Lumenos
Executive Chairman, Graphic Surgery
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A Three Act Play
Act I:
Myth, Reality and The Money
Act II: The Triple Threat
Act III: What’s a Insurance Carrier to Do?
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Act I
Myth, Reality and the Money
 The best health care on the planet, right?
 Most expensive health care delivery system in the world
 $2.1 trillion (16% GDP) ramping to $4 trillion (20% of GDP) in 6 years
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Act I
Myth, Reality and the Money
 The best health care on the planet, right?
 Most expensive health care delivery system in the world
 $2.1 trillion (16% GDP) ramping to $4 trillion (20% of GDP) in 6 years
 Waste 20% to 30% of resource on care that does nothing to improve our
health ($500 to $700 billion)
 According to Rand, 55% of care meets adopted guidelines
 That means 45% does not – flip of the coin?
 Wide variation in health care services (Wennberg, Dartmouth Atlas)
 Poor performance on comparative health indicators
 Aging population; 50% of Americans have one or more chronic
diseases; personalized medicine on the horizon
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A Simple Test
Answer “yes” or “no” to the following questions
1. I am within 5 pounds of my ideal body weight
2. I exercise 30 minutes or more on most days of the week
3. I eat a healthy diet – 5 fruits/vegetables most days of the week
4. I don’t use tobacco products
5. I consumer 2 or fewer alcoholic beverages a day
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A Simple Test
Answer “yes” or “no” to the following questions
1. I am within 5 pounds of my ideal body weight
2. I exercise 30 minutes or more on most days of the week
3. I eat a healthy diet – 5 fruits/vegetables most days of the week
4. I don’t use tobacco products
5. I consumer 2 or fewer alcoholic beverages a day
YES: 4%
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Behavior drives disease Costs of “the big three”
• Average 10% of total claims costs attributable to obesity
• 60% of Americans exceed ideal BMI
• Soon to become the leading cause of death
• Average 10% of total claims costs attributable to tobacco
• 25% of Americans smoke
• Leading cause of death. . . still
• 60% perform no substantial activity or exercise
62% of the rise in insurance costs from 1987-2002 due to population risk factors and their treatment
Source: Thorpe, et al, Health Affairs, June 2005
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What if?
Mediterranean Diet, Nonsmoker, Daily
Activity & Moderate Alcohol Use
Disease
Reduction
Compared to US
Comment
Heart Disease
64%* - 83%**
80% due to modifiable
risk factors
Cancer
60%*
Approximates NCI
estimates
Diabetes
91% **
No Type II Epidemic
All-cause Mortality
50%*
25 year Okinawa
Program Similar
Findings
* Knoops et al and **Rimm, Stampfer, JAMA 2004;292:1433-1439
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Behaviors Drive 50% of Costs
Assumes Average Total Compensation = $55,250
Source: U.S. Bureau of Labor Statistics,
Employer Costs For Employee Compensation Summary
Dec. 9, 2005.
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Prevalence of Chronic Illnesses
More than 130 million Americans
suffer from chronic conditions;
that number will continue to rise.
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Chronic
Condition
Diabetes
Prevalence
U.S. Population
20.8M
Heart Disease
60M
135
125
45
120
115
44
Asthma
30M
43
100
42
1995
2000
Chronic Conditions
2005
2010
% of Population
 $14B
 6.3M lost work
days
 14M lost school
days
110
105
 $277B
 5.9M lost work
days
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% of Population
Population in Millions
140
46
 $132B
 11M lost work
days
48
130
Annual
Cost
Depression
21M
 $43B
 13.2M lost
work days
 $30B in lost
productivity
Source: NCQA State of Healthcare Quality Report, 2007
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P4P: What Providers Fear (one of many)
Copyright Cartoon Bank
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Act II: The Triple Threat
1. Little evidence that what we do works
 <15% of medicine based on evidence (David Eddy)
 4% of treatments backed up by firm science (IOM)
 50% have no or weak evidence (IOM)
2. The odds are barely in the patients’ favor (Rand)
 The odds of getting the right treatment ≈ the odds of getting the
wrong treatment
 Heads you win… tails you lose
3. Wide variations in care based on geography (Wennberg, Dartmouth
Atlas)
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The Dartmouth Atlas
 Pick any elective surgical procedure
 Hemorrhoids in Vermont
 5 fold variation in a distance of less than 3 hours
 Back surgery
 3 times more likely in Idaho than Manhattan
 Tonsillectomy
 10 x variation from one region to another
 Hysterectomy
 5 fold variation
 In health care, the ordinary laws of nature don’t apply
 Roemer’s Law: Supply drives Demand
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Act III
So, What’s a Smart Health Plan To Do?
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Acknowledge:
We Live In A Rough Neighborhood
% of Adults
Supermarkets
39
Banks
34
Hospitals
34
Computer Hardware
27
Computer Software
22
Packaged Food
21
Airlines
“Which of these industries do you
think are generally honest and
trustworthy – so that you
normally believe a statement by a
company in that industry?”
17
Car Manufacturers
13
Telephone
11
Life Insurance
10
Pharmaceutical
9
Health Insurance
9
Managed Care
5
Tobacco
4
Oil
3
0
5
10
15
20
25
30
35
40
45
Source: Harris Poll, National Survey of 1,833 Adults, 10/05
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The Consumer Experience
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If you are over age 45, you may remember
(and yearn for) this experience
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Winners’ Strategic To-Do List
 Accept where we are
 The lucrative arbitrage called insurance is over
 We are “middle men” and add little value from the consumers pov
 Stop digging
 Recognize the power base is shifting to the consumer
 Vast majority of employers want to exit, immediately if not sooner
 Start acting like problem solvers, not cost cutters
 Preoccupation with unit cost and utilization game is over
 Focus on what matters… to consumers
 Give people a reason to believe
 Recognize the power of “brand”
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Winners’ Strategic To-Do List
 Provide real-time access to financial and medical data
 Google + Cleveland Clinic
 Launch aggressive programs focused on
 lowering risk factors (remember, this is where the illness/money lives)
 Increasing compliance with evidence-based medicine
 Give consumers an economic stake in the outcome
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Winners’ Strategic To-Do List
 Give people the clinical data translated into behavioral action
 Most people make the right decision most of the time
 Informed consent is powerful: 24% reduction in surgery
 Spine surgery – new SPORT findings yesterday
 Get the data out there immediately
 Drugs are particularly vexing




Vioxx vs. naproxen, Lipitor vs. lovastatin
Why did prices on the top 50 drugs go up 7% last year?
How can I lower my cost?
Provide “point-of-prescription” data
 Help the sickest-of-the-sick navigate the chaos
 Reality: there is no “health care system”
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What if the WellPoint Safety
Sentinel System was in place in 2000?
Vioxx Case Study
Signal Count
Serious
Adverse
Events
Analysis of our membership would have detected a signal
of increased cardiovascular events within 3-6 months
after FDA approval
Heart
Attacks
&
Strokes
Threshold
for Action
Timeline
Vioxx® History
Jan1998
May 1999
Hints of cardiovascular
issues in clinical trials
FDA
Approved
April 2001
Sept 2004
Vioxx
removed from Market
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Why is this so hard?
 Health care: largest industry in our economy
 The business is mushy (sophisticated business term)
 Huge dollars at stake
 Eliminate $700 billion waste = eliminate the entire US high tech industry
 US expenditures on health care approaching world wide market for oil
 We spend more per capita on health care than China spends per capita…
on everything
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Why is this so hard?
 Health care executives
 “I know, it’s a mess, but we are all doing quite well, thank you”
 “Trend is our friend”
 “I know our service sucks, but its slightly less sucky than the competition”
 “Innovators Dilemma” by Clayton Christensen
 The fundamental reason dominant companies don’t innovate?
 They don’t want to – it’s that simple (but read the book!)
 Creates a breeding ground for innovators… and a cemetery for BDCs
 “Overtreated - Why Too Much Medicine Is Making Us Sicker and Poorer”
by Shannon Brownlee
 NYT No. 1 Economics Book of 2007
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