american academy of ophthalmology

Practice/Profession of Ophthalmology: Impact of Consolidation

David W. Parke II, M.D. CEO

American Academy of Ophthalmology

WWW.AAO.ORG AMERICAN ACADEMY OF OPHTHALMOLOGY

Consolidation §  Happening in industry §  Happening in medicine generically? §  Happening in ophthalmology?

•  What is the trend? •  What are the likely impacts? •  How can we make it work for the profession and for the paDents?


Healthcare System Integration: Is It an Unintended Consequence?

§  “The economic forces put in moDon by the [PPACA] Act are likely to lead to ver$cal organiza$on of providers and accelerate physician employment by hospitals and aggrega$on into larger physician groups.”

•  DeParle et al, Annals of Internal Medicine, 2010


Hospital Integration §  20% (1K of 5K) of U.S. hospitals will seek out mergers

between 2013-‐2018 •  Booz & Co.

§  65% of buyers are non-‐profit in 2012 •  Trinity Health/Catholic Hospital East 82 hospitals •  Ascension Health 113 hospitals

§  2012: 1/3 of ASC’s that ‘disappeared’ became hospital out-‐pt departments (HOPD’s)


How Significant is MD Employment?

§  53% of MD’s are currently self-‐employed •  61% in 2007; 76% in 1983 •  37% of primary care; 72% of surgical sub-‐specialists

•  AMA survey of 3,466 MD’s released 9/16/13

§  212,000 MD’s employed by community hospitals; 160,000 in 2000

•  AHA 2011 data


§  About 25% of physicians are in ACO’s §  About 15% planning to join soon

•  Shortell et al., Health Services Research, 2014

§  11% of ophthalmologists parDcipate in ACO’s •  Contractually affiliated: 77%

•  AAO 2013 survey data

Physician ACO Participation


§  1% of ophthalmologists employed by ACO’s; 2% of ophthalmologists employed by hospital or hospital-‐owned MD group

•  2013 Academy biennial survey of US members

Ophthalmologists and ACO’s


Ophthalmology and Hospitals §  Eye care amounts to less than 1% of hospital revenue §  Hospitals lose $150-‐150K per yr per employed physician in the first 3 years of employment •  But hospitals generally receive 5-‐10X surgeon salary in related revenue—not in ophthalmology

§  ASC’s being repurchased by hospitals resulDng in diversified procedure mix and ↑per procedure revenue


Consolidation: Narrow Networks §  Medicare Advantage: narrowing networks §  ACA exchanges have mostly narrow network plans •  McKinsey: 70 percent of products

§  One OB in one network for 400 sq miles §  One reDna surgeon for 200,000 people


Narrow Networks: Going Forward §  RegulaDon of network adequacy

•  All ACA plans approved for adequacy o  But much more anenDon for next year

•  Complaints unlikely to block narrow networks o  Federal outlays dependent on keeping premiums down

o  Public much more sensiDve to costs now


Consolidation: More Reference Pricing– total joint replacement

§  California: Price varies from $15,000 to $110,000 (commercial PPO populaDon)

§  Anthem Blue Cross and CalPERS (1.4M) have established a threshold of $30,000 – reference price – for a standard inpaDent hip/knee replacement procedure.

§  PaDent exposed to full price above $30,000 level §  46 hospitals qualify – over 50 did not.

§  Impact for AMD, glaucoma, refrac$ve surgery?


Is Ophthalmology on the Radar? §  Ophthalmology has two of the “Top Twenty” diseases on total cost basis for CMS: •  Cataract •  Glaucoma

§  If CMS included Part B outpaDent drug costs, ophthalmology would have four, including: •  AMD •  DiabeDc reDnopathy


Consolidation: Focus on Quality §  $65BB paid for ‘higher quality and more efficient treatment’—within FFS

§  155,000 PCP’s and 60,000 specialists in such arrangements– and 24MM enrollees

•  July 9, 2014 BCBS AssociaDon


IRIS™: Consolidation of Data §  3,356 Academy members signed with IRIS

§  3,797 interested and awaiDng contract •  Some either on EPIC or not eligible

§  23 different EHR’s


Uptake § OIS 2013: 370,000 pt visits

§ OIS 2014: 10,140,000 pt visits 3,940,000 unique pts


The Projections

§ OIS 2013: 2MM pt visits by 2016

§ OIS 2014: 33MM pt visits by 2016


Clinical IT Consolidation: Potential Industry Impact

§  Bener, faster, cheaper clinical trials with ‘real-‐world’ data

§  Huge populaDon-‐based natural history data §  Bener post-‐market surveillance studies §  More rapid, complete comparison of products for physicians and industry

§  Periodic new datapoints allow for customizaDon


Ocular Surgery News, March 10, 2014

“To jump to the bo=om line: Every ophthalmologist should not just walk but run to sign up for this program. Not only will it provide great value to the individual ophthalmologist and his or her pracEce, but it is criEcal to the success and future standing of ophthalmology in the U.S. as a whole.” Richard L. Lindstrom, MD


Ophthalmology as a Career Extremely Satisfied

49%

Very Satisfied 38%

Somewhat Satisfied

10%

Somewhat Dissatisfied

2%

Very Dissatisfied*


Extremely/Very Satisfied with the Academy

58% 62% 65% 67% 69% 74% 75% 76%

0%

20%

40%

60%

80%

100%

1999 2001 2003 2005 2007 2009 2011 2013