Transcript SteveLipstein(BJC)June8x

Financial Executives
Networking Group
Steven H. Lipstein
June 8, 2011
Expenditures as % of GDP
21.1
11
9.8
Germany
Finland
7.3
6.2
5.8
Korea
Mexico
7
Slovak Republic
Ireland
7.1
9.5
6.4
Czech Republic
New Zealand
Poland
8.6
9.9
Australia
Japan
10.3
Canada
8.3
9.4
Iceland
Spain
8.4
9.4
Greece
Hungary
9.4
OECD Average
7.8
9.1
Norway
Luxenbourg
10.2
4.5
10.3
12.1
11.0
12.3
13.5
11.6
16.7
15.1
15.4
14.3
13.9
15.5
16.5
17.1
16.6
16.9
17.9
23.7
21.1
19.3
23.7
24.2
24.2
24.9
24.9
24.9
29.3
27.6
28.6
26.3
32.1
32.2
32.8
33.3
33.4
30.6
29.0
27.0
26.0
23.1
20.6
18.3
17.4
20.4
8.2
United Kingdom
Portugal*
20.1
8.9
Italy
13.3
30
5.9
21.8
10.4
Austria
16
21.6
11.2
Switzerland
United States
23.7
9.6
Denmark
20.8
23.1
10.3
Belgium
37.6
34.9
33.6
35
Netherlands
21.4
0
12.2
10
22.9
15
12
20
France
5
25.5
25
12.1
40
Sweeden
Total Health and Social Service Expenditures for OECD Countries, 2005
Total Social Service Expenditures
Total Health Service Expenditures
*Expenditures for Portugal are from 2004 due to missing data for 2005.
Source: OECD Health Data 2009 (Accessed June 2009); OECD Social Expenditure Dataset (Accessed Dec 2009); Health and Social Service
Spending; Associations with Health Outcomes Article by Elizabeth Bradley, Ph.D, Benjamin Elkins, MPH, Brian Elbel, Ph.D.
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Federal Government P & L (2011) (in billions)
Revenues
$2,100
(14% of GDP)
Expenses
• Defense / Homeland Security
$ 786
• Medicare / Medicaid
$ 773
• Social Security
$ 727
• Other Mandatory
$ 676
• Other Discretionary
$ 640
Deficit
$3,602
(24% of GDP)
($1,502)
(10% of GDP)
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Increasing Debt and Deficit
Source: International Monetary Fund, World Economic Outlook Database, October 2010. Last observation: 2009.
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Debt Reduction 101
Total Debt = $15T
Targets:
Total GDP = $15T
Debt / GDP Ratio = 100%
Total Debt / GDP Ratio = 60%
Annual Federal Budget Deficit % < Annual GDP Growth % (About 2 – 3 %)
If GDP Growth = 2.5% then 2021 GDP = $19T
then… 2021 Debt at 60% of GDP = $11T
Debt Reduction Required = $15T (Current Level) Minus $11T (60% of 2021 GDP)
= $4 Trillion
Democrats:
$3T in Spending Cuts + $1T in New Taxes
Republicans:
$5T in Spending Cuts + $1T in New Tax Cuts
$4 Trillion is the Consensus Target
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Spreading the “Hurt” on the First $3 Trillion
Defense =
$1 Trillion
Medicare/Medicaid =
$1 Trillion
All Other =
$1 Trillion
Of the $1 Trillion Attributable to Medicare/Medicaid,
One-Third Allocated to Hospitals/Doctors
= $330 Billion
Of the $330 Billion Allocated to Hospitals, 0.1% Impact on BJC HealthCare
= $330 Million
(This Amount Deducted From BJC 10-Year Forecast of Cash Flow)
ACOs plus HIZs plus Bundles plus all other CMMI Innovations
= -$330 Million to BJC HealthCare
Manage Costs to Medicare Breakeven: Supply Chain, Revenue Cycle, Enterprise Resource
Management, Ancillary and Pharmacy Utilization, Length-of-Stay, Labor Inflation = PCE
Inflation
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BJC is Uniquely Bi-State (Missouri and Illinois)
Imagine:
Then:
NIH (Leading Bio-Medical Research)
Washington University School of Medicine (WUSM)
+
+
Mayo Clinic (Leading Adult
Specialty Care)
+
WUSM and BJC HealthCare
+
Children’s Hospital of Philadelphia (Leading
Pediatric Specialty Care)
WUSM and St. Louis Children’s Hospital
+
+
Cook County Hospital (Anchor Hospital
of Regional Safety Net)
Barnes-Jewish Hospital and Christian
+
+
Intermountain Health (Leading Integrated Delivery
Network of Community-Based Hospitals and
Doctors with Highly Regarded Patient Outcomes)
Missouri Baptist, Christian, Alton, BJWCH,
BJSPH, Progress West, Sullivan, Parkland, Clay
County, Boone, BJCMG, BJC Home Care, BJC
Corp. Health, BJC Behavioral Health, BJC Health
Literacy and School Outreach
Large, Balanced, Diversified, Risk-Dispersed Portfolio
(Not Highly Integrated – Yet)
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Standard and Poors Credit Rating For BJC HealthCare
“AA” Long-Term Rating Reflects BJC’s:
•
Status as a well-established, multi-hospital regional system with stable system membership, a long
track record of system integration, good leverage with third-party payers, and excellent financialrisk dispersion;
•
Maintenance of a leading, though not dominant, share in the greater St. Louis, MO market,
bolstered by broad regional and national draws at its largest facility, Barnes-Jewish Hospital, due to
a reputation of clinical excellence and a long-time academic relationship with the highly respected
Washington University School of Medicine (WUSM), which is one of the top recipients of federal
research funding;
•
Strong financial profile, characterized by low leverage of 18% debt to capitalization, solid
unrestricted liquidity with 286 days’ cash on hand as of December 31, 2010 with cash to long-term
debt of over 3x;
•
Very capable management team☺that is responsible for the system’s strong financial performance
in the past five years and a strong governance structure that makes system members highly unlikely
to disaffiliate;
•
Historically strong maximum annual debt service (MADS) coverage averaging over 8x for the past
five years, with fiscal 2010 MADS coverage at 11.59x; and
•
Continued good operating performance in fiscal 2010 with margins of 5.5%
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Health Care Reform
Coverage Expansions:
Coverage Improvements:
Payment / Delivery System
Improvements:
16 Million Added to Medicaid
16 Million Added Via Individual Mandate
Medicare RX Donut Hole
Guaranteed Issue (w/o Health Status or Gender Rating)
Premium Rate Bands (1x – 6x) (Age, Tobacco Use, Family Composition)
•
•
•
•
•
Medicare Rates ↓
Tax Cadillac Coverage
Simplified Electronic Billing
ACOs, HIZs / Bundles (CMMI)
PCORI (CER)
•
•
•
•
•
State Insurance Exchanges
Meaningful Use of IT
IPAB
Drug Prices
Geographic Variations
Individual Mandate: Constitutional or Not?
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Health Reform Impact
Medicaid Expansion
“Starter Set” for
Delivery and Payment
Reform
Fees Levied
on Devices/Pharma
Private Insurance Fixes
Individual Mandate
Insurance Exchange
Incremental Change
Over Time
I
N
T
E
R
F
A
C
E
Knowledge
Domain
Domains
Care
Delivery
Domain
“A”
• Medical Schools
• Teaching Hospitals
Key
Players
• NIH
• Developers/Manufacturers of
Drugs, Devices, Implants,
Equipment and Instrumentation
I
N
T
E
R
F
A
C
E
Payer
Domain
“B”
• Patients
• CMS
• Doctors
• State Medicaid Plans
• Hospitals
• Private Insurance Plans
• Post-Acute
• Employers
• Other Research Organizations
Source: Mayo Clinic Health Policy Center, 2009, adapted.
The Payer Domain
Will grow
to 70 million
as baby boomers
reach age 65
Payers
Population
Medicare
Will grow
to 74 million
with Medicaid
expansion
Medicaid
Will shrink
to 19 million
with individual
mandate
Initial growth
to 180 million+
then decline as
Medicare grows
Uninsured
Private Insurance
Options
• About 47 million
• About 58 million
• About 51 million
• About 164 million
• Over 65
• Living Below A
Poverty Threshold
• Many w/o Access to
Employer-Based
Coverage
• Under 65
• Some Disabled
• Some Disabled
• Above Poverty
Threshold
What Health Systems and Payers are Doing (w/o Informed Consent)
Care
Delivery
Domain
Reduce Variations and Waste
of Resources
Increase Value: Outcomes per
Dollar Expended
BJC HealthCare Professionals /
Hospitals
– Washington University
Physicians
– BJC Medical Group
Population Management
(Non-Clinical)
– Enrollment
– Claims Administration
– I/T (Financial)
– Member Services
– Actuarial Expertise
I
N
T
E
R
F
A
C
E
“B”
Payer
Domain
Reduce Price
Reduce Consumption
Payers
Populations by Payers
– Medicare Advantage
– Medicare ACOs
– Center for Medicare/
Medicaid Services
(CMS)
– BJC (Employer)
– Essence
– BJC Affiliated MDs
– Rehabilitation Institute of St.
Louis
– BJC HealthCare
Professionals
– BJC Hospitals
– Aetna
Patient
– BJC Home Care
– Cigna
Population Management
(Clinical)
Populations by Medical
Conditions
– MD Leaders and
Clinical Team Captains
– Obesity/Diabetes
– Multi-Disciplinary
Teams
– Complex Patients
– IT (Clinical)
– Facilities
– Outcome Measurement
– Payment Models
(Team Rewards)
– COPD
– CHF
– Stroke
– Back Pain
– Anthem
– Coventry
– HealthLink
– United
– Washington University
– BJC
What Employers Are Doing
•
The “Super Six” of Health Promotion and Disease Prevention
– Medical Home
– BP <130/90 or Medicine
– No Tobacco Use
– BS <140 or Medicine/Diet/Exercise
– BMI <30 or Weight
Management Program
– BC <230 or Medicine/Diet/Exercise
•
Pay a Medical Home more money (incentives) to manage patients away from Hospitals
(reduce admissions / ER visits / ancillary utilization).
•
Pay a Pharmacy Benefit Manager (PBM) to improve medication compliance and use of less
expensive generic substitutes.
•
Increase Employee Out-of-Pocket cost-sharing (“Skin in the Game”):
> Co-Pays
> Deductibles
> Premiums
> Reimbursement and Spending Accounts
> Donut Holes
•
Bjchelpforyourhealth.com And myHealthFolders.com
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