healthcare landscape 2016€¦ · health administration. dr. nowicki teaches healthcare accounting,...

Healthcare Landscape 2016

Economics Driving Healthcare Reform

Dr. Michael Nowicki, FACHE, FHFMA

Professor of Health Administration

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Speaker Bio

Since 1986, Michael Nowicki has taught at Texas State University where he is now Professor of Health Administration. Dr. Nowicki teaches healthcare accounting, financial management, and economics in both the graduate and undergraduate programs in healthcare administration. Dr Nowicki has received numerous university and professional association awards for his teaching, service, and research. Prior to joining Texas State, Dr. Nowicki held administrative positions in the hospital division of Humana, Valley Medical Center of Fresno, Hutzel Hospital in the Detroit Medical Center, Georgetown Medical Center, and Lubbock Medical Center. In addition to his teaching responsibilities, Dr. Nowicki has provided training support to such organizations as Spectrum Health, Ascension Health, Indiana Health, Indiana Army National Guard, Cardinal Health, Kaiser-Permanente, University Hospitals in Cleveland, HCA, Mercy Hospitals of Northern Ohio, and the Baylor Healthcare System, as well as numerous law firms litigating malpractice cases. At the 2006 site visit by Commission on Accreditation of Health Management Education, Dr. Nowicki’s research was singled out as a “strength” of the Texas State program. This comment was based not only on his textbooks, but also on his numerous publications and presentations for organizations such as the American College of Healthcare Executives, the Healthcare Financial Management Association, the Association of University Programs in Health Administration, Voluntary Hospitals of America, the American Hospital Association, the Texas Hospital Association, the Texas Public Health Association, the Texas Medical Association, and the Texas Organization of Rural and Community Hospitals. Dr. Nowicki’s first textbook, Introduction to the Financial Management of Healthcare Organizations, was published by Health Administration Press in its sixth edition in 2015. Dr. Nowicki’s second textbook, HFMA’s Introduction to Hospital Accounting was published by Health Administration Press in its fifth edition in 2006. Dr. Nowicki holds a bachelors degree in political science from Texas Tech University, a masters degree in health administration from The George Washington University, and a doctorate in educational policy studies and research from the University of Kentucky. He is board certified in healthcare financial management and a Fellow in the Healthcare Financial Management Association where he has served as President of the South Texas Chapter, Regional Executive for five-state Region 9, National Board Member, Chairman of the Chapter Services Council, Chairman of the Forums Council, and Chairman of the Board of Examiners. He is also board certified in healthcare management and a Fellow in the American College of Healthcare Executives and currently serves as the Regent for Central and South Texas. He can be contacted at [email protected].

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Government Debt in Trillions

0

5

10

15

20

25

1965

1975

1985

1995

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Projected Debt

Govt Debt

Public Debt

4

Total Debt as Percentage of GDP

0

20

40

60

80

100

120

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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Components of GDP by Percentage

-10

0

10

20

30

40

50

60

70

80

Exports

Business Investment

Government Spending

Personal Consumption

6

Federal Budget Surpluses/Deficits in billions

7

Federal Budget

Medicare, Medicaid,

CHIP 21%

Defense 20%

Social Security 20%

Safety Net Programs

13%

Benefits for Federal

Employees & Vets 7%

Interest on Debt 6%

Infrastructure 3%

Education 2%

Medical Research

2%

Non-Security International

1%

All Other 5%

Revenue

46% PIT

35% PT

10% CIT

9% Misc.

9

Percentage of Population 65+

and Percentage of Health Expenditures

10

Funding Public Programs--Hypothetical

0 2 4 6 8 10 12

Under 5

15 to 19

30 to 34

45 to 49

60 to 64

75 to 79

Over 90

Hyp. (%)

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Funding Public Programs--Actual

0 2 4 6 8 10 12

Under 5

15 to 19

30 to 34

45 to 49

60 to 64

75 to 79

90 to 94

Actual (%)

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Generations by Size

Veterans (born before 1946) represent 11 percent

of the population.

Boomers (born between 1946 and 1964) represent

25 percent of population.

Generation X, or Busters, (born between 1965 and

1981) represent 15 percent of the population.

Generation Y, or Millennials, (born between 1982

and 1995) represent 27 percent of the population.

Generation Z, or Net Generation, (born between

1996 and 2010) represent 22 percent of the

population.

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Percentage of Population by Cohort

0 5 10 15 20 25 30

Net Gen

Millennials

Gen X

Baby Boomers

Veterans

Percentage

14

Total Health Spending

in billions

Martin, A. B. et. al. (2016) National Health Spending In 2014: Faster Growth Driven By Coverage

Expansion And Prescription Drug Spending. Health Affairs, 35(1): 150-160.

Keehan, S. P. et. al (2015). National Health Expenditure Projections, 2014-24: Spending Growth

Faster Than Recent Trends. Health Affairs, 34(8): 1407-1417.

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Health Spending as Percent of GDP



Keehan, S. P. et. al (2015). National Health Expenditure Projections, 2014-24: Spending Growth

Faster Than Recent Trends. Health Affairs, 34(8): 1407-1417.

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Health Expenditures by Service

32.1

26.4 5.2 2.7

5.0

9.8

3.4

1.3 6.4

2.6 5.1

Percentage

Hospital

Professional

LTC

Home Care

Other Care

Drugs

ME & Supplies

Govt Admin

Net Insurance

Public Health

Investment



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Health Expenditures by Source

32.7

20.4 10.9

10.1

6.3

3.7

10.8

5.1

Percentage

Private HI

Medicare

Out-of-Pocket

Medicaid, Fed

Medicaid, State

Other HI

Other TP and PH

Investment



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Current Fiscal Policy is “Unsustainable”

The “status quo” is not an option

– We face large and growing structural deficits largely due to

known demographic trends and rising healthcare costs.

– GAO’s simulations show that balancing the budget in 2040

would require actions as large as

• Cutting total federal government spending by as much as 60% or

• Raising federal taxes to 2.5 times today’s level.

Faster economic growth can help, but it cannot

solve the problem

– To eliminate the deficits using economic growth only,

average annual growth would need to be in the double digit

range for the next 75 years (for comparison, during the

1990’s, the economy grew at an annual average of 3.2%)

Comptroller General David M. Walker, Saving Our Future Requires Tough

Choices Today, December 1, 2005, www.gao.gov/cghome.htm

Private Sector – Consolidation of both providers and payers*.

– Transition to direct contracting

Quasi-Public Sector (Affordable Care Act) – Federal laws addressing access, cost, and quality

Public Sector – National Health Insurance/National Health Service

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Alternatives

*See Becker’s Hospital Review—Anthem to buy Cigna—then there were three: 7 key points, July 23, 2015.

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Direct Contracting

• Direct Contracting--The practice of large

employers contracting directly with integrated

delivery systems.

I

D

S

I

D

S

Insurance

Employer

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Direct Contracting

• Direct Contracting--The practice of large

employers contracting directly with integrated

delivery systems.

I

D

S

I

D

S

Employer

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Direct Contracting in Transition

Contract with Health

Plan

Partner with Health Plan Go it alone

FFS P4P Shared

Savings

Full

Capitation

Private

Label

Provider-

Sponsored

with outsourced

Provider-

Sponsored

Lower Risk/Reward Tradeoffs Higher

Wagner, K. (2015). Shifting Gears: The Move Toward Value-Based Payment. Healthcare Executive, May/June: 10-18.

healthcare landscape 2016€¦ · health administration. dr. nowicki teaches healthcare accounting,...

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