Disruptive Innovation & Disruptive Innovation & Healthcare Reform: What's Healthcare Reform: What's

Ahead?Ahead?

Paul H. Keckley, Ph.D., Paul H. Keckley, Ph.D., Executive Director for the Deloitte Center for Executive Director for the Deloitte Center for

Health SolutionsHealth Solutions

2009 Medical Professional 2009 Medical Professional Liability SymposiumLiability Symposium

Chicago, Illinois ~ March 24 & 25, 2009

U.S. Health System ReformU.S. Health System Reform

Paul H. Keckley, Ph.D.

Executive Director

Deloitte Center for Health Solutions

Budget Director Pick Budget Director Pick Sounds AlarmSounds Alarm

(Orszag Confirmation Jan. 13, 2009)(Orszag Confirmation Jan. 13, 2009)

• “The principal cause of the nation’s long term budget problems is rising health costs”.

The public view: “The The public view: “The system is confusing…”system is confusing…”

• Only 3 in 10 consumers feel they know how the U.S. health care system works. How Well Do You Think You Understand

How the U.S. Health Care System Works?

3%4%

9%10%

17%

14%

17%16%

7%

4%

1 2 3 4 5 6 7 8 9 10

Not at all Completely

27%

Source: 2009 Survey of US Health Consumers

The public view: “The The public view: “The system isn’t working very system isn’t working very

well…”well…”• Only 1 in 5 consumers give the U.S. health

care system an above-average report card grade; those grading the system “F” outnumber those giving it an “A” by 6 to 1.

How Would You Grade the Overall Performance of the U.S. Health Care System?

2%

18%

43%

25%

13%

A B C D F

Excellent Failing

38%

20%

Source: 2009 Survey of US Health Consumers

The American Recovery The American Recovery and Reinvestment Plan: and Reinvestment Plan:

$787 billion$787 billionGoal Direct Investments ($144.8B) Indirect Investments ($159.3B)

IncreaseAccess

$87B Medicaid$27B COBRA (6.5M)$32.3B SCHIP expansion (4M)*

Reduce Costs

ImproveQuality

$1.1B Comparative Effectiveness$10.2B Biomedical research$19 B Health Care IT$1.0B Prevention & wellness

$3B National Science Foundation$.8B Nat’l Oceanic & Atmospheric Assoc.$19.9B Food Stamp increase$4.1B child care services

ImproveInfrastructure

$1.2B VA facilities $7.2B broadband access$38.7B energy & electricity$2.8B Homeland Security$3.1B Indian facilities$2.3B DOD facilities$19.4B clean environment$27.5B highway$20.5B public transportation

Long term: health reform Long term: health reform in two stagesin two stages

Stage One: 2009-2011

Stimulus Package Inclusions

•Focus will be expansion of benefits to newly unemployed, executive orders that extend coverage (SCHIP 2/2/09) and jobs related programs•In additon, certain programs that buoy states against expected increases in Medicaid enrollment•A few campaign promises: EX. HCIT

Stage Two: 2010-2016

Systemic Reforms—Long Term

•Insurance market reforms•Individual mandate + employer pay or play + FEHP2•Comparative effectiveness•Episode based payments•Medical Home•Expansion of role: FDA, CDC•Medicare eligibility•Federalization of Medicaid

Message to Congress Message to Congress February 24, 2009February 24, 2009

• Energy, education and health care: focus of systemic reforms

• Two consistent themes: Reduce costs Expand coverage

FY10 Reserve Fund FY10 Reserve Fund Proposal $634 BProposal $634 B

• FY 10 Budget Preview - February 26, 2009: $634B 10 year health care investment to fund coverage for uninsured & underinsured Funding from…•$318B tax increases (mortgage deduction decrease, Medicare premium increases for wealthy enrollees, $250K HH tax cuts eliminated 2011)•$177B from Med Part D Competitive Bidding•$139B lower payments including $24B Hospital Bundled Payments -- ($17B) and Substandard care ($8B)

Key PlayersKey Players

CHUCK GRASSLEY:

Senior Senator from Iowa

TED KENNEDY:Senior Senator from

Massachusetts

MAX BAUCUS:Senior Senator from Montana

ARLEN SPECTER:

Senior Senator from

Pennsylvania

HENRY WAXMAN: Member of the U.S.

House of Representatives from

California's 30th district

PETE STARK:Member of the U.S.

House of Representatives from

California's 13th district

MIKE ROSS: Member of the U.S.

House of Representatives

from Arkansas's 4th district

ROY BLUNT:Member of the U.S.

House of Representatives from Missouri's 7th District

Key PlayersKey Players

KATHLEEN SEBELIUS: United States Secretary of

Health and Human Services – Nominee

NANCY-ANN MIN DEPARLE: Director of the White House

Office on Health Reform

Long term reforms focus in Long term reforms focus in four areasfour areas

ConsumerismConsumerismFocus: CDHPs,

Transparency, PHRs, Incentives, Value

Comparative Effectiveness/ Evidence Comparative Effectiveness/ Evidence – based Medicine– based Medicine

Focus: (1) Personalized medicine, (2) comparative effectiveness; episode based payments to acute

organizations

2

Health Care Information TechnologyHealth Care Information TechnologyFocus: (1) e-prescribing, ( (2) care coordination (3)

administrative cost reduction 1

3

4

Decreased errors Decreased care gaps Reduced malpractice

premiums Improved efficiency

3 – 7 NMEs per year Center for comparative

effectiveness Knowledge management Prepare for tort reform

New medical homes Reimbursement realignment Primary care workforce MD led clinical care coordination

Coordination of careCoordination of care

Focus: Primary Care 2.0 Model (The New “Medical Home”)

Respond to transparency & PC 2.0– Connected care– Rx reimportation– Medical tourism

PHR (Shared Decision Making) Incentives

– Experience rating & differential premiums– Healthy behavior rewards

Complementary/Alternative Medicine

6 year implementation

1:8 to 1 ROI

Savings: $530B (NPV)

Balance: cost andquality

Contact InformationContact Information

For more information, please contact:Paul H. Keckley, Ph.D., Executive Directorpkeckley@deloitte.com

For more information on the Center's view of health care in the new administration, please visit: www.deloitte.com/us/healthcarereform

And visit our website to subscribe to our content:http://www.deloitte.com/CenterforHealthSolutions/subscribe

Center for Health Solutions