Successful Integrated

Care Systems

February, 2015

CONFIDENTIAL AND PROPRIETARY

Any use of this material without specific permission of McKinsey & Company is strictly prohibited

| McKinsey & Company 1

Known context: aging populations drive care demand

SOURCE: McKinsey team analysis, HES 2010/11, FIMS, Q research/NHS Information centre, PSSEX;

NHS Reference Costs

Exhibit 7: Strong relationship between age and prevalence of long-term

conditions

19-390-18 40-64 65-74 75-84 85+

50

40

30

20

10

0

AgeYears

Percent of total

100

90

80

70

60 5+ conditions

4 conditions

3 conditions

2 conditions

1 condition

0 conditions

SOURCE: McKinsey team analysis, HES 2010/11, FIMS, Q research/NHS Information centre, PSSEX; NHS Reference Costs

64% of those

aged 75-84

have more

than one LTC

69% of those

aged 85+

have more

than one LTC

| McKinsey & Company 2

Integrating care: from art to professional management

SOURCE: McKinsey

1) Remarkable success on managing populations around the

world

2) All successful players do 3 things

- Understand their patient population really well

- Build new care model around the patient

- Tailor key enablers IT, payments, and workforce to their

specific local context

3) Much can be done in 2 years

| McKinsey & Company 3

Australia – Diabetes Care

Project

Successful integrated care systems exist in many countries

Valencia:

Integrated HC

UK – Torbay

integrated care

UK – Tower

Hamlets

UK – NWL

integrated care

Montefiore Bronx

Pioneer ACO

Germany - Bundesknappschaft

UK – Greenwich

South Central

Foundation Alaska

Camden Coalition of

Healthcare Providers

State of Arkansas BCBS CareFirst

BCBSMA AQC

Geisinger

ChenMed

CareMore

New York Care

Coordination Program

Colorado

Children’s Health

Access Program

SOURCE: McKinsey analysis of public source material; details in appendix

| McKinsey & Company 4

Integrating care: from art to professional management

SOURCE: McKinsey

1) Remarkable success on managing population around the world

2) Most successful players do 3 things

- Understand their patient population really well

- Build new care model around the patient

- Tailor key enablers IT, payments, and workforce to their

specific local context

3) Much can be done in 2 years

| McKinsey & Company 5

McKinsey research shows that in all these case examples, 3 building

blocks to a successful integrated care systems

Support with Enablers

Payment Governance Information Leadership Patient Centred

Success in coordinated care

Organise Delivery

Care

Coordi-

nation

Self-

empowerment

and education

Individual

care plans

Multi-disciplanary

teams

Understand Needs 2 1

3

SOURCE: 40 leaders in integrated care research programme

| McKinsey & Company 6 SOURCE: Example health economy, McKinsey analysis

Understanding needs of population requires segmentation 1 UNDERSTAND NEEDS

Joe, 34

No LTC 1

Mostly

healthy adults

Susie, 10

Diagnosed

with epilepsy

4 Children with

one or more

LTCs

Janet, 25

Diagnosed

with

schizophrenia

5 Adults and

elderly people

with SEMI

Frank, 79

Diagnosed

with CVD,

COPD and

diabetes

3

Elderly

people with

one or more

long term

conditions

Abbie, 1

No LTC 2

Mostly

healthy

children

Patient story

▪ Joe is a healthy adult

▪ He rarely visits his GP

▪ Joe was admitted to hospital with

appendicitis 5 years ago but made a full

recovery

▪ Susie was diagnosed after being

admitted to hospital after experiencing a

partial seizure

▪ Janet was diagnosed at 19

▪ She lives with her parents

▪ She has recently been discharged from

hospital after a 45 day stay in the

psychiatric ward

▪ Frank has multiple long term conditions,

and is having trouble navigating disease

pathways

▪ He was admitted to hospital twice this

year with complications for diabetes,

including a foot ulcer

▪ Abbie is a healthy child, attending GP

mainly for planned appointments (e.g.

immunisations)

▪ She receives care from GP, practice

nurses, health visitor

Annual

cost

£

▪ 800

▪ 3,600

▪ 27,000

▪ 9,500

▪ 650

Non-elective

ad-missions

per year

▪ <1

▪ 2

▪ 1 (45 day

stay)

▪ 2

▪ <1

GP

contacts

per year

▪ 1 visit

▪ 5 visits

▪ 8 visits

▪ 9 visits

▪ 1 visit

| McKinsey & Company 7

Age

Learning

disability

Socially

excluded

groups

Mostly

healthy

Defined

episode of

care Single LTC

Multiple

LTC

2 5 8 10 11

12 1 4 7

0-15

16-74

75+

6 3

26,72932,081

9,497

661

808

n/a

NA

NA

NA

3,588

4,017

Serious

and

enduring

mental

illness

Intensive

continuing

care needs

NA NA 1.4 44.3 2.4 64.5 NA NA

13.9 131.5

109.6 72.5 3.2 11.3 NA NA

64.2 257.9 503.0 406.6

12.5 55.0

x £ym Number of people (000) Total annual cost Average cost per capita (£)

Estimated 13/14 spend per capita by segment

Numbers represent estimates derived from the YoC database. ~65% of total cost (~£670 mln out of ~£1,043 mln) has been

linked to the segments. The remaining ~35% of CCG, NHSE and LA spending has been proportionally distributed across the

segments. The YoC database includes spend for the following settings: Acute, MH, CHS, CC, Prescribing, SC and GPs.

Excluded are specialist costs

4,396

9

NA NA

SOURCE: Example health economy of 800.000 patients

ILLUSTRATIVE

| McKinsey & Company 8

Organise delivery around the person 2 ORGANISE DELIVERY

Individual

Home-care team

▪ Provide health and

social care

multidisciplinary support

▪ Modify home

environment to facilitate

independence

Named GP

▪ Provides regular monthly

review and same day

care when needed, 20-

40 minute appointments

▪ High service user/GP

continuity

▪ Manages list of ~450

service users

▪ Develops trusting

relationship with patient

▪ Leads multidisciplinary

team

▪ Facilitates production

of care plan

Individual

▪ Takes ownership of care

▪ Seeks education on condition

▪ Makes decisions on best care

to suit preferences

▪ Self-manages some conditions

Other GPs

▪ Participate in regular

review of patient care

within practice/network

▪ Provide informal advice

when necessary

▪ Provide peer review of

named GP’s outcomes

▪ Provide out of hours care

as part of network

Other providers

▪ Provide social and

mental health input

where required

▪ Provide specialist advice

on site and remotely

▪ Provide inpatient beds

and treatment

| McKinsey & Company 9

5 key enablers are crucial to change behaviour SUPPORT WITH ENABLERS

SOURCE: Carter, Chalouhi, Richardson – What it takes to make integrated care work (McKinsey Health International, 2011); Latkovic - The

trillion dollar prize (Health International 2013) and Fountaine, Richardson and Wilson - Changing behaviour in primary care

(Health International 2013)

3

Governance Information Leadership Payment Patient Centred

▪ Significant

(30%+)

▪ At scale

(30%+)

▪ Sustained

(3-5 years)

▪ Align risk and

reward across

system

▪ Support

– Citizen

records

– Clinical

decision

making

– Peer

pressure

– Payment

▪ Solve

Information

governance

▪ CEOs &

Boards

commitment

of resources

▪ Bind in

payors,

hospitals,

primary care

and local

government

▪ Hold to

account

▪ Role model

behaviour

▪ Deliver

consistently

▪ Hold peers to

account

▪ Work within

team

▪ New ways of

doing things

requires

support to

learn how

▪ Encourage

self care and

patient

empowerment

throughout

| McKinsey & Company 10

Integrating care: from art to professional management

SOURCE: McKinsey

1) Remarkable success on managing population around the world

2) All successful players do 3 things

- Understand their patient population really well

- Build new care model around the patient

- Tailor key enablers IT, payments, and workforce to their

specific local context

3) Much can be done in 2 years

| McKinsey & Company 11

To build a coherent population management system is 10 year+ journey,

but impact at scale can be done in 2 years (examples)

SOURCE: McKinsey

- Activity incenting

products, e.g.

Discovery

- Social marketing in

infectious diseases,

e.g. PSI

- Smoking bans

- Urban planning, e.g.

MA road tax

- Care packages plus

OD, e.g. diabetes

- Home-telecare, e.g.

Airdale

- I triage, e.g. Aetna

- System care

planning, e.g. stroke

- Carve out, e.g.

Clinicas Azucar,

Chenmed

- Switch to episode

based payment, e.g.

Arkansas

- Ueber homecare

Action

complete in 2

years, and

time to

impact

Within 2

years

Fast to

milestone,

but longer

to impact

Primary prevention LTC management

Thrust

| McKinsey & Company 12

Case Example – Integrated care models in

Tower Hamlets are now nationally recognised best practice

▪ Patients in Tower

Hamlets suffered

worse outcomes,

especially for long

term conditions,

than peers

elsewhere

▪ Local CCG was

committed to

delivering significant

improvements in

long term conditions

and public health

Impact Context Approach

▪ Designed a comprehensive

organisational development

programme to support groups of GP

practices working together as networks

of 4-5 practices, jointly delivering care

packages for diabetes and

immunisations.

▪ Developed care packages led by

clinical working groups and testing

with patient representative groups

▪ Facilitated design of new care delivery

model co-developed by GPs. This

required them to have joint Multi

Disciplinary Teams, share patient lists,

and share resources (including being

paid as one group).

▪ Facilitated and ran trainings,

coaching, and other tailored support

to the clinicians, both in large group

settings and through individual visits to

practices

▪ Increased investment in

primary care from 9.4% to

13.8% of total spend

▪ Diabetes pilots achieved 11%

increase in people with

BP<140/80; 10.4% increase

with cholesterol <4.5; 7.7%

increase with HbA1c<7.5;

600% increase in patients with

diabetes care plans; modelling

suggests 12-14% fall

in acute spend

▪ Immunisation rates rose by 50

% to achieve herd immunity at

92%

▪ Impact of work cited in BMJ

Quality and Safety Journal 1

1 Hull et al., Improving outcomes for patients with type 2 diabetes using general practice networks: a quality improvement project in

east London, BMJ Qual Saf, 2013;0:1-6

| McKinsey & Company 13

Case example – Arkansas Medicaid has become a leader in the US

▪ Arkansas undertook

the design and/or

implementation of

episode-based

payments for

behavioral health

conditions, maternity

and neonatal care,

as well as for

persons with

developmental

disabilities (DD) and

those in need of

Long-Term Services

and Supports

(LTSS)

Impact Context Approach

The integrated solution for behavioral health

centered on four components

▪ Behavioral health homes and patient-

centered medical homes to manage

integrated care plan and coordinate care

across settings to improve adherence and

align services to needs

▪ Behavioral health episodes: Payment

systems to increase provider accountability,

align interests, support accurate diagnoses

and increase adoption of evidence-

informed practices

▪ Independent assessment & care

planning: Increase utilization of cost

effective home & community based

services and detailed assessment to

improve care planning to better align

services with needs and to improve

outcomes

▪ Provider accountability: Monitoring and

reporting to increase provider transparency

and empower continuous improvement

activities among BH stakeholders

▪ Largest implementation of

episode-based payment in the

U.S., involving >1,000

providers in Wave 1 across a

diverse range of medical,

surgical, and behavioral

episodes: ADHD, CHF, joints,

pregnancy, upper respiratory

infections

▪ Achieved savings of up to 22%

in initial wave of episodes

▪ Won $42M in CMS support

through a SIM Model

Testing grant

▪ Credited by Governor for

contributing to the lowest

growth rate in Medicaid

spending in 30 years

| McKinsey & Company 14

Case Example – Through defined processes supported by innovative

technology, ChenMed has become a clear leader in elderly care

▪ The program is

aimed at low to

middle income

Medicare Advantage

patients with

complex chronic

care needs

▪ There are currently

36 ChenMed health

centers across 8 US

states

▪ Organisation is

clinician-led, with

strong cultures and

shared values going

back to founder

Impact Context Approach

▪ 38.2% lower hospital bed days

18% lower hospitalization rate

and 17% lower readmissions

rates compared to national

averages for patient group

▪ 73% medication adherence for

people with diabetes,

compared to 44% previously1

▪ Average Net Promoter Score

of 92 in 2011 (30% of patients

surveyed each day)

▪ Very strong IT infrastructure

supports care delivery, performance

management and revenue

optimization e.g., physicians and

patients communicate through mobile

channels outside of appointments

supported by the EMR

▪ Patients are offered high-frequency

consultations (minimum 1/month),

enhanced services in a single location

and free transport to appointments

▪ Physicians are offered small panel

sizes (typically 1:400) and financial

incentives to manage patient care out-

of-hospital

▪ High staff-to-physician ratios

support task-shifting – with onsite

specialists, pharmacy, diagnostic

dental and acupuncture services all

available

1 Medication possession ratio measured from 2009 to 2011 by University of Miami research team following introduction of new dispensing system

SOURCE: Health Affairs, 32, no.6 (2013):1078-1082; ChenMed website; Concierge medicine for the poorest, Forbes, 23/02/12