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Methodist Health Systemand

Health Care Reform

Pamela Stoyanoff, EVP/COOMay 19, 2014

Methodist Health System - Locations

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Methodist Dallas Medical Center

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Methodist Dallas Medical Center

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Methodist Charlton Medical Center

Methodist Charlton Medical Center

301 Beds

Established 19755

Methodist Mansfield Medical Center

Methodist Mansfield Medical Center

160 Beds

Established 2006

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Methodist Richardson Medical Center

Methodist Richardson Medical Center209 Beds

Established 1966

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Methodist Richardson Medical Center

• $120 million project• New construction of 266,575 square feet;

19,313-square-foot renovation• 125-bed, four-story acute care hospital • Technologically advanced, state-of-the-art facility• Expanding services and service area• 900 professionals, including 100 new jobs• Physicians representing more than 35 specialties

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Methodist Rehabilitation Hospital – 40 beds

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Methodist Hospital for Surgery, Addison (36 beds)

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Methodist McKinney Hospital – 20 beds

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Other Entities

•Golden Cross Teaching Clinic Residencies & Fellowships

•DMPN (PHO) –500+ physicians

•Methodist Richardson Cancer Center

•Methodist Health System Foundation

•Methodist Pavilion Properties

•CareFlite

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Employed Clinical Care Sites

•MedHealth: 25 Family Health Centers

• Pavilion Practice Management

• MRMC 501(a)

• Neurosurgeons

•Transplant Physicians

•Trauma Surgeons13

What You Might Not Know about Methodist

• $1.1 billion company (>$150 million of charity/uncompensated care)

• Largest employer in Southern Dallas

• 7500 employees

• 1500 physicians

• Currently implementing over $350 million of construction/expansion projects

• Listed among Fast 40 in Healthcare – five-year growth rate

• Top 10% nationally in Quality - Joint Commission for Accreditation of Healthcare Organizations (JCAHO)

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What You Might Not Know about Methodist

• Top 100 Most Wired Health Systems in America

• Best Place to Work – 10 years in a row

• 1/3 of Trauma/Air Ambulance network for Dallas

• DFW’s only CMS pilot Accountable Care Organization (MSSP program)

• AHA Platinum Award as Fit Friendly Worksite

• November 24 – North Texas’ first successful bio-artificial liver transplant support using Phase II clinical trial extracorporeal liver assist device (ELAD)

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Methodist Health System Key Statistics

2006 2013

Admissions 37,305 50,195

ER Visits 99,742 211,586

Newborns 6,085 7,125

Transplants 106 121

Physicians 588 1,821

Employees 4,044 7,074

Volunteers 630 1,606

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Healthcare Reform/PPACA

• Context Opinions Scenarios

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Healthcare Reform - Context

•National Health Status

•National Cost of Healthcare

•Tsunami of Aging in America

•Scenarios

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In the News

“Better health is not about

Obamacare, it's about you.”

~ Dr. Sanjay Gupta

CNN Chief Medical Correspondent8:53 PM EST, Monday, December 2, 2013

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Public Health Status of America

• Why do Americans spend more on healthcare but have poorer public health metrics than any other “high-wealth” nation?

– Worst infant mortality

– Higher injury and homicide rates

– Highest rate of adolescent pregnancy and STDs

– Second highest HIV and AIDS incidence

– Higher drug- and alcohol-related mortality

– Highest obesity and diabetes rates (adults and children)

– Second highest level of heart disease

– Higher incidence of chronic lung disease

– Higher incidence of disability

Source: 2013, National Research Council and Institute of Medicine

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Healthcare Costs in America

• % of GDP– USA – 18%– Netherlands – 12%– France – 11.6%– Germany – 11.6%– Canada – 11.4%– United Kingdom – 9.6%– Japan – 9.5%– Italy – 9.3%

• #1 reason for personal bankruptcy• Growing at 4x real wages• Fastest growing benefit cost for employers

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Healthcare Costs

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America’s Aging Population

• 10,000 baby boomers are reaching age 65/day –started January 1, 2011 and continues through 2028.

• 2009 – 39.6 million – 12.9% – 1/8• 2030 – 72.1 million – 19% – 1/5• 65+ spend 2x/capita more than 45 – 64• 10% of Medicare enrollees spend 60% of all $’s• LYOL – 25% of all $’s

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America’s Aging Population

• 10,000 baby boomers are reaching age 65/day — started Jan 1, 2011 and continues through 2028.

• 2009 - 39.6 million - 12.9% - 1/8 - 2030 - 72.1 million - 19% - 1/5

• 65+ spend 2x/capita more than 45-64,

• 10% of Medicare enrollees spend 60% of all $, LYOL – 25% of all $

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Scenarios with Exchanges

I. Relatively Smooth Rollout• Few employers drop coverage

• Some, but not too many people, enroll in HIX

• Doesn’t break the machinery

• Doesn’t break down the employer-sponsored health insurance market

• The ACA does not become a huge political issue in 2014 & 2016 and we stay on the implementation schedule Who Are The Enrollees?

70%In good to

excellent health

56%Employed full-time

33Median

age

Source: Kaiser Family Foundation, “Kaiser Health Tracking Poll,” March 2013, available at: kff.org; PwC, “Health Insurance Exchanges: Long on Options, Short on Time,” October 2012, available at: www.pwc.com; Health Care Advisory Board interviews and analysis.

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Scenarios with Exchanges

II. Employers Hit the Exits• HIX too successful way too fast

• Employers drop coverage faster than expected

• Congress will either have to raise taxes or change the ACA rules by raising the opt-out penalty for employers and scaling back on individual subsidies.

Source: Towers Watson “Health Care Changes Ahead Survey 2012;”Advisory Board interviews and analysis.

Employers “Very Confident” Health Benefits Will Be Offered At Their Organization a Decade From Now, 2011

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Scenarios with Exchanges

III. Exchange Machinery Works; Enrollment is Modest• Employers generally stay committed to health

insurance as an employee benefit perhaps opting for private exchanges vs. public

• Eligible individuals weigh the benefits vs. premiums, scant penalties, and adopt a wait and see approach

• As long as insurors remain interested in the exchanges and keep competitive products available, this may actually be the least disruptive option and the one that gives the exchanges the best chance to work.

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Scenarios with Exchanges

IV. The Exchange Machinery Breaks, Chaos Rules• Exchanges flop due to technical problems, excess enrollment or

eligibility complexity

• Citizens can’t find their way through the rules and plan options

• People are angry and headlines are ugly

• 2014 and 2016 elections would definitely be impacted negatively for Democrats and the Senate may even be in play for Republicans

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Implications for Methodist Health System

• Our mission was to “improve and save lives” before PPACA and that hasn’t/isn’t changing

• To be successful in the future we must continue doing what we have been doing even better while we develop new “muscle sets”

• Efficient, safe, high quality, experientially superior care delivery will become the ticket to the dance

• Creating synergistic alignment models between physicians, hospitals, and other components of the care delivery system will be the essential game changer

• Our ability to optimally manage population health, and health costs associated with a population, is a strategic need but how we do that will be varied

• Expanding Medicaid in Texas and success with Health Insurance Exchanges are pivotal to our ability to transform from fee for service to value based reimbursement.

• At Methodist hospitals will remain the core around which concentric models of healthcare services will develop and evolve

• Ability to innovate, change, and adapt with a profound sense of urgency will be theessential organizational core competency

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What can Vendors do to help?

• Proactively work with us to reduce costs

• Share in risk• Develop products that support

population health management and physician integration

• Follow protocols when bringing new products to health system

• Keep in touch• Share stories of successes

elsewhere

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QUESTIONS?QUESTIONS?QUESTIONS?QUESTIONS?

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