the next triple aim: innovation, transformation … next triple aim: innovation, transformation and...
TRANSCRIPT
© Oliver Wyman
Confidential Discussion Document
The Next Triple Aim: Innovation, Transformation and Partnerships
April 2014
Confidential Discussion Document 2 2 © Oliver Wyman
Introduction to Oliver Wyman Oliver Wyman Group is a consulting firm with more than 3,000 staff in over 50 offices in the Americas, Europe, Asia and the Middle East
NERA Economic Consulting
LIPPINCOTT Brand
Strategy and Design Consulting
Delta
Communications, Media &
Technology (CMT)
Consumer & Industrial Value Transformation
(C&IVT)
Health & Life Sciences
(HLS)
Financial Services
(FS)
Manufacturing, Transportation
& Energy (MTE)
Leadership Development
Actuarial
Confidential Discussion Document 3 3 © Oliver Wyman
Oliver Wyman’s Health & Life Sciences (HLS) practice overview
Industries • Provider
– Integrated Delivery Networks
– Academic Hospitals – Government Organizations
• Health Services – Payers – Healthcare IT – Retail services
• Life Sciences – Pharmaceutical Companies – Biotech – Medical Devices – Public Health Organizations
Platforms and Key Capabilities • Healthcare Reform
– Our ground-breaking analysis informed the debate on healthcare reform on the Hill and is now part of our analytic toolbox. We use scenario planning, strategic realignment, and transition management to help clients reposition themselves.
• Integrated Health Management (IHM) – Our IHM framework is a comprehensive, holistic approach to care management and
delivery. With IHM, companies can compete on the cost and quality of care and participate in the PCMH and ACO transformations.
• Strategic Growth Services – Oliver Wyman’s depth of knowledge and state-of-the-art analytics have helped
organizations pick high-growth markets and build winning capabilities. We focus on competitive differentiation, shifts to retail, and strategic repositioning.
• Bio-Pharma Ecosystems – The end of the blockbuster era calls for a dramatic shift in thinking. We have created a
new strategic framework that maps the evolution of medicines markets, and how the various ‘ecosystems’ are becoming more different than similar.
• Reinventing R&D – We enable bio-pharma companies to advance fundamental transformations in R&D—
challenging R&D rules of thumb more appropriate for yesterday’s portfolio, integrating the ‘health value’ frame in R&D processes, and building for tomorrow.
• Market Access / Economic Value – Payer influence is growing in today’s market, setting pharma up for a large paradigm
shift. Our integrated payer and pharma practice is designed for this new marketplace.
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Our HLS practice focuses on ideas for transforming healthcare
Confidential Discussion Document
Waves of Change
Confidential Discussion Document 6 © Oliver Wyman 6
When will the markets tip? When will business models need to solidify?
$0
$0.5 T
$1.0 T
$1.5 T
$2.0 T
$2.5 T
$3.0 T
$3.5 T
$4.0 T
2010 2015 2020 2025
Managed Medicaid MA Duals Innovative Employers Individuals & Exchange
Solidification
$268B
$1.5T
$578B
$1.2T
$231B
Value Market Opportunity by Funding Source 2010-2025
Net New Spend CAGR
$231B 17%
$1.0T 14%
$578B 21%
$1.4T 25%
$253B 21%
$3.7T in 2025 (70% of total spend)
Value market tops 30% of the total
Value market to grow from $232 B to $3.7T by 2025
TIPPING POINT Value market tops 50% of the total
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What is the evolutionary path that organizations will follow?
Formation Value enhancement Accountable care
Impa
ct o
n Q
ualit
y, A
cces
s, a
nd C
ost
Time
Physician – hospital clinical integration Adoption of full financial risk
Historical fee-for-service
“disconnected” model
Formation of partnerships,
alignment with physicians, and integration of technology
First steps to value:
efficiencies, alignment, and
service coordination
Efficient episode
management
Integrated condition
management
Population health
management
Integrated value
transformation
Current areas of network development focus:
important but low value yield
Empowering and incenting networks to advance quality and reduce cost through
elimination of variation and adoption of EBM
True accountability and value delivery
Confidential Discussion Document 8 8 © Oliver Wyman
Is total population health management a fad?
ACOs are quickly emerging across the nation… …and we anticipate a broad shift to value-based models over the next decade
Projected acute provider model evolution % of systems with FFV components in operating model
ACO prevalence by primary care service area
Source: OW Analysis (updated Aug 2012)
Population in PCSA
With ACOs
Without ACOs
<100K 100K-250K 250K-500K 500K+
OR ID
UT NV
WA
CA
OK
CO KS
TX
MT
SD
ND
NE
WY
MN
IA
WI MI
TN AR
LA
MS
IL
AL
IN
MO
FL
GA
SC
NC
WV KY VA
OH
DC
NJ
MD DE
MA
PA
VT
RI CT
NH
ME
NY
AZ NM
AK
45% of the US population lives in
markets with at least one ACO arrangement
Risk-taking systems
0%
20%
40%
60%
80%
100%
2010 2015 2020 Fee for service Mixed value models Total population health risk
% of Systems ~15% ~50% ~80%
# of Systems ~525 ~1,600 ~2,600
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What will drive innovation, transformation and partnership?
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What are the emerging business models?
Health and Engagement Enablers
Population Managers
Specialty Centers of Excellence
Infrastructure Services
Health management • Monitoring
• Medication management • E-health (web services)
• Coaching • Prevention/early
intervention • Multi-skilled teams
Consumer engagement • Life advocates
• Wellness/fitness • Consumer apps
• Social networks & gaming • Consumer decision tools
• Behavioral/social engagement
• Mobile monitoring
• Health information technology
• Health exchanges • Intelligent workflow
systems • EBM/cloud
• Population risk management
• Big data analytics • Cloud
• Consumer science • Social network
infrastructure • Open architecture
infrastructure • Consumer health
information transparency
• Surgical factories • Acute care • Specialists
• Skilled nursing • Rehab
• Hospice • Routine/ convenience
care • Retail/ specialty
pharmacy • Emergent/ Trauma
• Imaging/ Labs • Oncology • Dialysis • ASCs
Business model archetypes
2
1a
2a
3a 3b 1
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How much capital will be invested in the transformation?
Maturity to Accountability
Expanded value proposition (integrating financial services)
• Partnership formation
• Physician acquisition
Effective value
capture
• Space optimization
• Technology integration
• Efficiency focus
• Service line
alignment
• Efficient episode mgmt
• Assumption of risk
• Population health mgmt • Integrated
condition mgmt
Transformation Stages
Description Build the necessary organizational foundation and integration
Clinical redesign and capabilities build to shift toward quality, efficiency and pop. mgmt.
Adoption of full financial risk and accountability for care
Total Expected Provider Spending on
Transformation (2011-16)1
~$72BN ~$91BN ~$80BN
Assembly Value Enhancement Accountable Care Organization
Transformation Value Proposition
1Based on Oliver Wyman estimates for the total cost of a provider transforming into a full ACO
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Six BIG questions every health system leader
should be considering
Confidential Discussion Document 13 13 © Oliver Wyman
Patient volume
Consumer value
PBM’s and retail
pharmacies
Partnerships
Acquisitions
Partnerships
Partnerships
Health plans
Consolidation
Health plans
Consolidation
Health plans
Physician organizations
Health systems
Offense or defense?
1. Are we playing offense or defense?
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• Delivered via ecosystem • Open architecture • Relentless innovator • Information enabled
and predictive • Total health and wellness focus • Always engaged • 100% available and social • Magnetic for consumer • Superior results • Strong brand • Culture centered around a
service mentality • Vibrancy
Retailers/e-Retailers Social Media Companies
HIT/Service Companies Health Plans
Health assessment
Personalized, adaptive
Navigation
Convenient access
Analytics
Prevention services
Mobile/social
Connectivity
Cloud
EBM
Monitoring/ tracking
Performance management
Product/ distribution
Value-based pricing
Care teams
Coaching/ engagement
Shopping/ delivery
Rewards and loyalty
Consumer transparency
Support systems
Information management
2. Do we know where our capability gaps are and how to close them?
Do we know what the most important !value-added activities are?
Are we ruthlessly objective about what will take?
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3. Do we really have the consumer in focus?
My value chain
Collaborative consumer value chain
Heart patient
Consumer mindshare
Consumer loyalty
Consumer timeshare
Consumer engagement
Consumer wallet share
Consumer life share
Whole consumer
Today’s world Tomorrow’s world
1. Scope and scale of consumer engagement?
2. Value and power of the integrated consumer value chain – 1 + 1 = ?
3. Likely value chain organizers – what will it take – who will be trusted?
4. Dimensions of competition – anywhere, anytime, personalized?
5. Role of health status and benefits coverage in shaping value chain leadership?
Big data
Health Apps Crowd
Source
EBM Treatment
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4. Are we prepared to play in a multi-chain world?
From To Solo-sport orientation Ecosystem-based Wholesale Retail Sickness Total health & wellness Reactive Predictive/preventative Body part or diagnostic code Whole person Physical Virtual/anywhere/real-time Transactional Relational One-size-fits-all Personalized Opaque Transparent Individual/expert Crowd
My value chain Collaborative consumer value chain
Big data
Health Apps
Crowd Source
EBM Treatment
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Health retailers and e-retailers
Tech, consumer goods and services
Providers
Health plans
5. Have we really considered the compete or converge question?
Extra-industry players
Race to capitalize on higher value consumer relationships
Traditional healthcare players
Consumer mindshare
Consumer loyalty
Consumer timeshare
Consumer wallet share
Consumer biodata share
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• Is the cost of inaction on the rise? • Is there an inflection point where we can’t
catch up to the leaders of the pack? • If one of these models entered our
markets, could we respond?
6. Are we moving fast enough?
The leader advantage is expanding, fueled by new technology, capital markets, and hare earned lessons
Today-player questions
Today’s Volume Players
Org
aniz
atio
nal s
ophi
stic
atio
n
Value creation
2nd Generation Leaders
1st Generation Leaders