The Top Trends That Matter in 2014 (Webinar)


Top Trends That Matter in 2014

[Dan Burton]
Thank you, Tyler. Good morning everyone and we appreciate the opportunity to share this webinar content with you and thank you for your time. The content for this webinar comes from the interactions that we’re privileged to have with many clients that are in the process of transforming healthcare, and in that process, we have noted some important trends that we wanted to share in this webinar today. In our work, it includes the spectrum of healthcare delivery from very large integrated healthcare delivery systems all the way through academic medical centers, rural hospitals, physician groups, clinics, etc. And so, the content of today’s discussion will cover the spectrum of healthcare delivery. And we’re fortunate also to be able to work on a daily basis with each of the functional roles that were included in the poll questions. We’re happy to see a good representation across clinical, technical, executive, finance functions, and we’ll try to ensure that there is functional content that is relevant for each of those groups.

Before I turn it over to Bobbi, let me just introduce Paul and Bobbi, as Tyler mentioned. First of all, Paul Horstmeier serves as a senior vice president with Health Catalyst and he has been a dear friend and colleague for the last 15 years. He had 25 years of Fortune 500 in small business operations and general manager and experience that he brings to Health Catalyst. He is the other co-founder of HB Ventures and has added so much in terms of bringing a data-driven approach to the work that we do at Health Catalyst.

Now, let me introduce Bobbi Brown, another friend and colleague who has been with Health Catalyst the past couple of years as a vice president focused in the finance function. Specifically, Bobbi’s expertise resides really on the clinical finance side where she spent most of her career at both Intermountain Healthcare, as well as Sutter Health, and later at Kaiser Permanente. We’re very grateful to have Bobbi with us and a credit for her to facilitate the majority of the content that we discussed, and with that, let me turn it over to Bobbi.

[Bobbi Brown]
Okay. Thanks. Good morning to everybody and again, thanks to people who responded to our email. I always learn every time. I got some new ideas just from your questions and from some of your comments. So again, thanks. This is going to be a little different presentation today. We’re going to have a little bit of fun with this.

2014…The year of…

So just to get started, what should be on your screen, “2014…the year of…” and it’s the year of the Accountable Care Organization. As you know, there were about 500 when we ended the year, last year, that projected to double. It’s kind of more than just an organization. It’s almost a whole way of life. It’s a way of shifting your thoughts where you’re going to be taking groups of providers that are coming together voluntarily and trying to give the best care to the patients they serve in the best environment and the right setting and have high quality and low cost.

Right now, it’s interesting, I just did two graphs on Medicare ACOs and a lot of them were started by the physician practice, both in a network and a group practice, and for hospitals and physicians together, another set of hospital, and then the other with the federally qualified healthcare centers. Today, we are starting to see results from this now. The quality scores were just published. 29 of the 114 ACOs saved $129 million in 2012. So it’s just starting. We’re starting to see what’s happening. If you look at the location, you’ll see a lot in the Midwest and the east. The West is lagging a little bit there. And again, we had some savings according to the study by the Commonwealth Funds. The patients had almost 6% lower the total cost of care than the non-ACO patients. So, looking at it, to start small sample size but looking pretty good. We will obviously continue to study this and see what the results are, and I do have some general comments on this. I’d like to get some other comments from my panel.

[Dan Burton]
One of the things that we’ve noted in working on ACO projects with clients across the spectrum is that whether or not a health system is officially an ACO, we’re seeing certainly a trend towards every health system starting to think in the mindset of an ACO because of some of the regulatory trends that Medicare cuts, Medicaid cuts, the trend for shared risks with commercial payers. So we’re seeing a general trend that more and more health systems, regardless of their official affiliation, are thinking more and focusing more on ACO-type measures.

[Paul Horstmeier]
It was interesting at HIMSS to see a lot of discussions about ACOs. I went to almost every session about the ACO and the theme they came out across the board was that everyone was talking about the criticality of data in the ACOs. For example, Catholic Health Initiatives stated that for any of their shared risk arrangements, data was the new currency. and they felt like they had harnessed the power of data to be timely, meaningful, trusted, and available.

Mercy Health Select talked about their experience from an ACO standpoint and they said, “To be an ACO, you need three things, a common EHR, a robust data warehouse, and a care coordination platform.” So they really realized that data was sort of the middle of that sandwich for ACO success.

UPMC talked about healthcare data liquidity being the foundation for accountable care, and they cited a study that was done by MIT Sloan Management and IBM where they did a survey to determine the primary obstacle for widespread analytics adoption. And the #1 deterrent was the ability to get the data.

And finally, we also heard an Advisory Board quote that said 51% of ACOs believed that the biggest problem in the first year of operations from an ACO standpoint was related to data or IT operations. So that’s certainly supported the notion that data is a foundational success factor for ACO success

2014…the year of Analytics

[Bobbi Brown]
Okay. We’ll go on to analytics. Analytics. What is it? I looked up in Wikipedia. It’s the discovery and communication of meaningful patterns in data. When I started my career as a financial analyst, everybody had to come to me for data. It was kind of fun. But I couldn’t get everything done that everybody wanted. Now, the data is being unlocked, more people are doing it out there, exploring the data, looking at it, the constant need, I want more, I want more, and it’s just a lot of fun to share this data with clinicians and figure out what’s the best way to display the data, how can we quickly show people where we are, how can we drill into it, what do people need, where is it coming from, how can we get a single source of truth, how can we put some data governance over this. So analytics is to me a very hot topic in this year.

[Dan Burton]
One of my colleagues at the Advisory Board made a statement that resonated very much, and we hope that it becomes more and more a trend as it relates to analytics. His statement was essentially to make sure that we have open and interoperable data sources and access to data, such that all of the analytics applications that are available can be set with the data they need, and then let’s let the best algorithms win. The best analytics algorithms will rise to the top, the most useful, the highest ROI, the most effective in terms of improving clinical outcomes, as well as the efficiency improvement. And we very much hope and see some evidence that interoperability and openness in terms of data being able to flow into useful analytics apps, regardless of where they come from, whether they’re developed internally by health systems or by a whole host of vendors that are developing very interesting capabilities here, that foundational element of interoperability, enabling the sharing of data with ease feels like a very critical trend that we hope continues to develop.

[Paul Horstmeier]
In addition, there were several analyst groups that made presentations or reports at HIMSS around the topic of analytics, and I wanted to share a few things that I thought were interesting. First of all the Chilmark Group mentioned that right now, in terms of the analytics marketplace, they are tracking and included in their latest reports 60 analytics vendors with the assumption that they’ve missed 20-30 more. So we certainly look at that as a signal that, yes, analytics are definitely what people are talking about. it’s also something that’s probably very confusing. We empathize with that hopefully we can be helpful in these education webinars to help that confusion.

The other report of note was issued by Gartner recently. They have been tracking the adoption of EMRs and the adoption of analytics. They recently came out with what we think is a landmark report that basically said that once an EMR has been deployed, the next most important IT initiative for CIOs is integrating business, financial, and clinical data into an effective EDW. So that also seemed to set a pattern or a model to that data warehousing is the next foundational platform that sets the stages for analytics. So it really does feel like 2014 is the year of analytics where it starts to really start to rise.

2014…The year of B Bundled Payment

[Bobbi Brown]
B Bundled Payments, this is an area where CMS and under the innovation center, they have been trying to get new waves for improving the quality and lowering the cost. This is an area that they’ve had a lot of apps for that. It began as a voluntary program. They have four different programs there, and as of January, they added some more to these numbers, but more people are participating. So the one I like the best is the acute and post care. That’s saying organizations are going to get paid for one payment for all part A and part B services that will go from the initial patient stay all the way through the post acute period. And I was just looking at some data, and when you look at that on my little pie graph on the bottom, the inpatient stay is 40% of that, the SNF 25%, physician 18%, potential for readmit 14%, and then a small piece of going into rehab. Now, you’re going to get one payment, and now the big deal will be how do we split this out, how do we work with physicians? Again, Medicare CMS is forcing this relationship with physicians. They’re forcing us to work with each other and really make a difference in healthcare.

2014…The year of C Consumer Transparency

Consumer transparency, C. this is something I believe a lot in. I think it’s in its infancy. Last year, there was an article in a TIME expose about the better pill in medicine. It’s not simple to do. In California, I came from California, we had a post discharge masters that is something but it didn’t do a lot for the consumer. The organization HFMA, Healthcare Financial Management Association, also had done a lot to get best practices in this area, to get consistency, to get clarity, to get transparency. A lot of it takes education, of educating all the staff but actually what we’re trying to do is figure out when someone comes in the door what is it going to cost for them, and be able to really work it, just I think the consumer is going to become more engaged in healthcare. I think this is a trend I see, like I said, in the future. There was a bill posted on the internet that made – for some, I got this off the internet, this bill, that somehow made, it was a very big deal to people. Correction, it wasn’t a big deal to me but it was going around the internet like crazy in December. So we do need to work with consumers. We do need to help out. We do need to understand that this trend is going to continue and billing is a very important area when that has impact with our patients as they come in to our facilities and work with us. So it’s just something that’s going to keep going.

2014…The year of D High Deductible Plan

D – High Deductible Plan. Another way healthcare is changing and making it harder for the consumer is under a high deductible plan. Now what do I owe? It’s not as simple as when I just used to come in the door. I was a Kaiser member for a long time, just walking the door and that was it. It was great. Now, as things get more confusing, what do I have to pay? Is it going to increase bad debt for hospitals and physicians? Is it going to increase charity fair? What exactly are my benefits? How do I know what they are? I saw a little snappy application the other day where you can tap in and it will help you answer these questions for consumers as they come in the door. The Kaiser Family Foundation published this study. And the consumer-driven health plan, they have 20%, it’s very effective in reducing cost, and 41% feel it’s somewhat effective. So it’s still out there. It’s still growing. It’s still going on. So again, another trend we’re going to have to deal with.

2014…The year of E Expenditure

E – Healthcare Expenditures, this is the famous slide that you see everywhere. Everytime somebody talks about healthcare, you see this. But the thing that’s kind of new is the last four years have been below 4% increase, which is good. You know, now we’re at 17.2% and we’ve kind of stayed there. It hasn’t been going up as much as past trends. If you look on the graph on the left, in the past, from 2000 to 2008, in that 2000 to 2004 period, we’re getting tremendous pressure on the healthcare as percent of GDP. We’re still at a point that to most people it’s not acceptable, this needs to come down. It certainly can’t increase. Why did it stay that way? Was it the recession? Was it Obama Care? I think it’s probably still too early for that to be kicking in but they are adding more and more tools to continue to push on both the cost and quality level. Is it because we’re increasing productivity? I hope so. I think so. I think we are increasing productivity in our organization. The reimbursement pressures are going to continue in this area but I think I have one quote that said almost by definition this is temporary. The Kaiser Family Foundation said, “Don’t rush to declare that the cost here is has been cured. It probably hasn’t. We still have. This is an area we continue to focus and need to work on.”

2014…The year of F Frequencies

F – Frequencies, the best word. Whenever you want to start something, often the best way to start is, well, what’s the most expensive? What do I do the most often? Where do I have the largest potential to make change? And I just found some interesting statistics, the five most expensive conditions in the United States. First, with septicemia, amazing amount of money spent there. And of course on our hospital stays and biggest hospital stay is on the labor and delivery side, the live one, followed by pneumonia, septicemia, and congestive heart failure. And just the top four, again, picking any of those areas to work, and what’s interesting, when we work with our clients, we almost always end up working in those areas. So again a potential for you to start thinking about where you want to start.

[Dan Burton]
Just a comment that we have experienced over the past year. We’re certainly seeing with the health systems and physician clinics that we’re working with, as well as we have noted with other leading health systems in the country, many have come forward courageously and shared specific plans that they have to really focus in these high opportunity areas and set specific goals in terms of efficiency improvements. One interesting data point that we’ve seen over the past year in particular is that there is a clustering of the most common and the highest probability and the highest opportunity areas within different settings but they are different. As you might imagine, we see in the outpatient world, there is a clustering. It looks fairly different from the inpatient world and at specialty hospitals obviously there’s difference as well. But if health systems have that foundational data available to them, it’s relatively a straightforward analytics exercise to build the roadmap that showcases whether those specific opportunities exist within that particular health system or clinic and then begin to systematically looking to improve efficiency in those areas.

2014…The year of G SGR – Sustainable Growth Rate

[Bobbi Brown]
G, I put this on G, Sustainable Growth Rate. I wrote this at the beginning of the year. Now, so much has happened, so you’re probably getting so many emails on this. When Congress returns on March 24th, we’ll see what happens. They had three months to consider and there’s always been. Every year, we’re going to change the sustainable growth rate. What was going to happen, was it going to be a 20% decrease in January? It got delayed. And they put a three-month kind of stay on it again. Again, something did go through the House to pass this, but they added up provision on with it that they would extend the individual mandate until 2019. They think that’s going to be – this is a great term. I saw DOA in the Senate. So ‘dead on arrival’ in the Senate. A great clinical term for us. So I don’t know what’s going to happen. My guess is nothing is going to happen. We’re going to have to put another patch on it.

The other deal in this that was interesting to me is that Medicare was wrapping this in with changing the meaningful use program, the measurements for the electronic health record and changing some physicians, making physicians, again, more value-based on their payment side. Again, a lot of people are upset about this, that this can’t seem to be resolved, where again my thought is it’s not going to be resolved. We’re going to have another patch. I just don’t know how long the patch is going to be and maybe somebody out there can give us some advice on this, but if you were trying to do something, if I was trying to do something from a financial projection standpoint, I would just keep the cost constant. I really don’t think we’re going to see a 20% decrease but we’re also not going to see any large increases.

2014…The year of H HAC – Hospital Acquired Conditions

H – Hospital Acquired Conditions, I’m sure by now, you’ve gotten my theme of the alphabet, so you’re probably sitting there thinking what’s going to come next, and I’m sure I know some stuff too. So under hospital-acquired conditions, starting in 2015, there was a rule passed in 2014 that Medicare is going to have a penalty for those conditions. You’re already getting penalized for readmissions, you’re already not paid for some of these but now what’s going to happen is you’ll be subject to a potential 1% penalty in 2015 and according to an estimate from CMS, more than 800 hospitals are going to be subject to that. It’s going to be broken into two domains, an index measurement and then just your class B rates and your CAUTI rates. Those are weighted 65% and index is waited 35%. Again, some people are thinking, gee, this is an overlap with other things that we do. Yes, it is. Penalties in the value-based purchasing program going to come up. We have had worked with a lot of our clients to improve a rate of this and they do it by technology and by making some measurements on this. So we developed some assessment tools. They’re all electronic. And we’ve had an 80% compliance with this electronic tool and overall it has – we’re just trying to see the interventions that are needed, are they taking place. And yes, they are taking place. It’s still a little too early to have a final result on this but, again, people that are working on this feel that by using data and getting away from a lot of chart and manual obstruction, getting more automation on this, that they are going to be able to improve it.

[Dan Burton]
I would also add that we’ve had the opportunity to be a part of a number of these activities at client health systems, and we’ve also seen evidence of some great work happening elsewhere with other leading health systems. It does feel like this is a fairly consistent opportunity for improvement at every health system client that we are working with in the inpatient setting, and certainly we believe that data becomes the foundation for improvement and success across the board.

2014… The year of I ICD-10

The big one for us, for all of us coming up, ICD-10 readiness. And I’m sure at HIMSS it got translated immediately. Marilyn Tavenner said, “No, there’s no delay in this. We are going to go. October 1, 2014 is the date.” I keep getting emails, you know, less than 200 days, are you ready? I believe right now everybody should be in the rehearsal phase. You should be testing and trying it. Generally, from everything that I’ve seen, people are ready but some of the smaller facilities are saying, no, they are not ready. 74% of smaller facilities and physician practices particularly said they haven’t started yet. But KPMG did a survey and said that a lot of people, that the impact assessment is done and so we’re on our way. We are definitely, it’s not something that there’s a soft end. As a vendor, we’re ready to receive, we’re ready to map and it will be pretty seamless for us. On the billing side though, it’s just something you’re going to have to test and make sure that you don’t lose any revenue in the whole process.

2014… The year of J Joint Accountability with Physicians

J – Joint accountability with physicians. We got a lot of questions or a lot of comments related to working with physicians. How do you do it? Did they have to be employed? This is a physician growth in a Midwestern Healthcare System. They are continuing to add physicians, both the specialist, the PCP, and the extender. All of them are growing over time since they’ve started tracking their physician acquisition. Employment is not the only avenue but we do need physician engagement in all of our projects that we’re doing. It’s the culture, as the continuing culture, it needs to be a partnership and it needs to be – what I have found just personally being able to share data with physicians really help to the engagement that was – quickly to have them in the room, they want to see this, we’re able to display it for them, we’re able to show them the trends, we’re able to compare it to their peers, we’re able to discuss, gee, what happened after we put it an intervention, is it working, and it’s just success built on success.

2014…The year of K Risk

K – Risk. The whole idea of risk, when we went into – I’m unfortunately old enough that I was around when Medicare DRG started. It was a big shift for us. We’re starting to see another shift now, changing to payment for a population. Look at the the three charts on the right, the pie charts. In 2010, this particular organization had 82% of their revenue under fee for service. They’re projecting in 2014 in their budget it’s only going to be 24%. Big change. If you look at what’s happening with population management, it was 5% in 2010 and it’s going to be 55% in 2014. So they are – it’s again an education, a learning, getting the skills in place to be able to deal with that. We have partners who have actually published something of the three phases that they look at as far as evaluating risks and looking at it over time and where is the starting point, starting with the primary care, moving up to wellness and to this prevention. So again, new area. A lot of potential for loss of revenue if you don’t do it right.

[Dan Burton]
I want to comment as it relates to risk and in terms of trends that we have seen directly. We’re observing outside of our direct work as well, and we are very intrigued with some of the new models of partnership between payers and delivery organizations that are starting to emerge a couple of examples that we have seen that are intriguing to us are some of the work at integration that’s occurring often and as well at Aetna. We think the openness to try new models, to bridge the gap from the old fee for service approach to a more shared risk model is intriguing and certainly facilitating some of the shifts that Bobbi described.

2014…The year of L Lean

[Bobbi Brown]
L – Lean. I’ve seen a lot of people are hiring lean consultants, which is wonderful and a great way to look at things when you look at a workflow process. If you look on the bottom left, the yellow, I think the yellow clouds are where we have potential pain points. They’re good from a lean perspective because it means where we can improve. What can we do better? What can we do to reduce wasteful events, lowering over time, improving in the billing area. Very good process. Great to do in areas, and this shows the business impact of a pharmacy workflow project. They were able to reduce the trips to the pharmacy, able to reduce the surcharges that they paid and able to reduce pharmacy head count. The thing about lean, I’m a finance person, so I like to, I want it to show me the money, and the ability to sustain it. So I think again you need data. You need to be able to track this into the future and say we made a change, did it work. And is it going to continue working, can I sustain it.

2014… The year of M MSPB – Medicare Spend Per Beneficiary

M – Medicare Spend per Beneficiary, I actually have two Ms here. I’m kind of cheating. Mergers – what is happening with all the mergers and acquisitions. So let me just talk about that for a second. They are continuing to grow up, grow in number, in size. In 2010, there were 125 hospital acquisitions, in 2012 there were 247. I couldn’t find good numbers on other areas, physician practices, payers, but it’s going to continue. We’re going to see that.

The other M is the Medicare Spend per Beneficiary. It’s a new measure that’s going to start in value-based purchasing in 2015. Again, that theme that I mentioned before, Medicare again looking for the whole package. They’re going to calculate the cost for a price from 3 days prior to the hospital admission through 30 days and they’re going to publish that and that’s going to be one of the weighted factors. 20% of the value-based purchasing is going to depend on that. So it’s going to be exciting.

[Dan Burton]
Let me just make a quick comment about the M & A trend. This is certainly something that we’ve experienced directly with a number of our health system clients in the past year – being a part of an acquisition or a merge,r and we believe that this trend will continue based on some of the external environmental factors as well. One of the trends that correlates with this that we mentioned earlier is that the more that mergers and acquisitions occur, the more critical it becomes with the data involved in those mergers and acquisitions to be as interoperable as possible. And an encouraging trend that we have observed growing I think with regards to a number of data sources is the importance of interoperability and this openness. Certainly we’ve seen evidence of this with Epic and Cerner and several other major sources, EMR providers, other source systems. And we think that interoperability is showcasing the importance when an acquisition or merger occurs, because now you’re dealing with even more source systems, more complexity from a data perspective. It becomes absolutely critical to have that interoperability to enable the new mergers then to be successful.

2014… The year of N Net income and operating income

[Bobbi Brown]
N-Net income and operating income. This is my life. On the top right, what I did was what would happen to a hospital that’s running about 2.5% margin. All the things that we’ve talked about so far, we know Medicare has been increasing very much. I put them at a 1% increase over the next couple of years. I’ve flattened my volumes and I took some hits against the value-based purchasing, the readmit program, and the hospital-acquired condition program, and it doesn’t take long for that income to switch to the wrong side of the bar and start going – I should have made them red – but start making – if you don’t do in the event any intervention.

The graph on the left, the Medicare margins for the hospital, this is published every year by MedPAC and they just in March just produced the results. So I have a number for 2012. The average hospital loss 5.4%, a -5.4% margin on Medicare. So it’s not a lot different from where it was in 2011. We didn’t get a lot but we also didn’t improve.

They also published some statistics that was interesting to me. On the four private hospitals, they were able to make a margin overall of 1.7%. So again, there are some hospitals out there and I was talking to a CFO on a call the other day and he was just so excited too that I’m a CFO who’s been able to produce Medicare at a positive margin. But he does it very much by sticking to the bread and butter and really working his cost structure, bending that cost curve.

On the bottom side, this is again a Midwest hospital group. They are at a big post a year at about almost 6% margin and they’re doing okay, a little difference from last year. In California, I saw a little difference from the previous year but nothing as negative as it was in the early part of the 2008-2009. So we have some margins that we need to keep on though. So we need to do everything we can. Because the revenue lever is really being pushed, we need to ought to be pushing on the cross lever.

2014…The year of O Outpatient – Growth Area up 2.9% from 2011

O – Outpatient. It’s fun to talk about some growth. And here, JP Morgan mentioned, is where the revenue growth is. It’s expansion in the outpatient care area. The outpatient visits on the right-hand side continuing to grow at this Midwest group every year. Some of that is from acquisition obviously and some of it has just continued growth as technology changes and we’re able to do more things on the outpatient side. The growth last year was 2%. In previous years, in 2012, it had gone up close to 5%. So it is bouncing a little bit but it’s still on the growing side. And then I think if you look at your revenue diversification over the years, if you just thought out, gee, where have we been on the hospital on the outpatient side and the physician and other and you’ll see it’s a shift. If you look back to 2009, we were at 50% on the hospital inpatient. Now, we’re down to 45% in 2013. That means a difference in your margin. It means a different way of thinking. I get a lot of acquisitions of outpatient surgery centers and moved them into hospital setting and it’s one. As one of my good friend, she was over the surgery center in a big hospital, very large hospital, did a lot of transplants, and I said, “Oh yeah, are you excited that we just bought this?” And she said, “Oh I’m not allowed to touch it” because they want to make sure on the outpatient side that I don’t give them to much for free because I put too much into the OR and the cost structure is too high and I know I need to change. So I want to learn from these surgery centers. I want to learn what’s the lean way to do it. So she was open to learning and the organization also realized that we’ve got to run this a little bit differently than we run our inpatient surgery centers.

2014…The year of P Population Health

P – Population Health. There’s just so much on this. Obviously, this could be and we do have many webinars on this topic. One thing I noticed in the news the other day, there might be a new person in the executive suite, the chief population health officer. A whole new model of care. New skills are going to be needed. Right now, about 46% of the organizations are fully committed to this. 27% are experimenting with it, but of that 46% that are committed to it, the CEOs actually said — I’m not sure – 54% of the CEOs actually said, “I’m not sure we’re ready for this yet.” So we have something new that’s coming down where we’ve got to learn and got to change. We will have to change some of our paradigms that we’ve worked with. We’re going to be involving more partnership, more working together. We can’t own everything but we do have to work together with all of the pieces that are up there, the outpatient, the inpatient, the SNF, the homecare. We all have to work together to get better care at a reasonable cost to make sure it’s in the right setting for our population.

2014… The year of Q PQRS

Q – PQRS, The Physician Quality Reporting System. So, those who did not participate in 2013 will be paid less for services in 2015 and that will include they’ll be paid 1.5% less. So I don’t know. I didn’t get any numbers on how many physician groups did not decide to report. If there’s never a perfect set of measures, there are a lot of measures in this. 284 measures are just a lot to keep track of. No way to do this kind of thing manually and you constantly want to be improving in the areas. Again, what are the areas you should pick to improve? All of these kind of trends that we’re talking about requires us to ask the question of where am I now, where can I improve, where do I need to be. Physicians are going have Medicare putting them under the same kind of regulations that they’re putting hospitals under it, changing it to more value-based.

2014… The Year of R Readmit Rate 2015

R’s, I have a couple of R’s too. The (40:57) of the readmit rate in 2015, it’s going to be up to a potential 3% penalty and we’re adding hips and knees and COPD. So a lot of hospitals maybe didn’t pay a lot of attention to this but it is growing. The average fine in 2013 was 0.42%, not that large. Average fine in 2014 decreased a little bit, and we are seeing a decrease in the Medicare readmit rate when you measure something and you constantly aren’t listing, it will go down a little bit.

So the other R’s that I have, a RAC audit. There was a great article, AHA put (41:29) by RAC. It’s going to continue, going to continue to see audits. They have been put on kind of a pause phase for a little while.

Reference pricing is interesting. Again, there’s not as much various risks in this but it’s more upfront risk. You say to a large employer, “We’re going to give the hip or knee replacement for this dollar amount.” The large employer says to their employees, “Okay, you can go to these three facilities. That’s what we’ll pay.” So again, as a finance person, I have to come up with a price that the market will bear and that covers my cost.

On the retail side, more of these small clinics responding to the consumer demands. Whether it’s the mini clinic or whatever it is, I see them growing out in the Phoenix area, I see them growing in my area. Again, another avenue into healthcare. Some more another competitor that we’re having in there that wants to get into our space, how do we work with them, what do we do with them, is it a good thing for the consumer, all that type of things. So change is there.

2014… The year of S Supply Chain

S Supply Chain. Supply Chain, you know, I’m sure we’ve all worked on Supply. This is an area where there’s a lot of best practices that you can – there is an organization, a healthcare materials management resource, there’s lots of benchmark (43:14) in there. Everyone acknowledges that it’s not just the cost. Continue to see non-compliance with contracts. Again, getting data out, analyzing a large amount of data and figuring out where can we make the change, what can we do. This is again a very good area to work on but it’s an area where you need physician assistance a lot of the time.

[Dan Burton]
And this is definitely a trend we have seen with the advent of more and more access to clinical data, but there have been some significant improvements that we’ve seen within our client base, as well as elsewhere where the use of very deep clinical data when combined with financial data in supply chain projects can lead to very meaningful improvements in terms of consolidation of medical devices, for example, that are standardized on Allina has experienced a significant success and improvement in their cost structure, narrowing up multiple sources of data, including Ridge Clinical Data and informing the clinical decisions as it relates to standardization.

[Bobbi Brown]
Great.

2014… The year of T Two midnight rule

The two midnight rule. Now, I know, (44:40) anybody call me, we have a kid in the bed and I know this is a CMS regulation. So just put right there. I’m sorry guys. I’m just flipping through these pretty quickly. So the two midnight rule, so much is going on with this right now. AHA has initiated an assault, which is good. A lot of confusion. I just pointed out on March 12, Medicare issued the third or fourth set of clarifications of 18 pages of questions and answers. It is a complicated thing. It was done under the administration of simplification act but it’s not simple. So what they are saying is if you’re not in there two midnights, you are an outpatient. If you’re an outpatient, the cost, the margin is usually less for a hospital, the cost to the beneficiary is higher, how do I get then into a SNF if I need a 3-day pay for a SNF. It is a very complicated rule. I asked one of our data architects the other day to get into one of our applications and show me in the past year how many patients did I have that were Medicare that were 1-day length of stay, how many did I have that were 2-day, how many did I have that were 3-day and I could start drilling by clinical program, where is this happening and I could just look and see what was the payment between the inpatient and the outpatient and of course it wasn’t good. So it’s just a lot in this area. I’m sure a lot of people are spending a lot of time on this, again, analyzing data, getting out and figuring out what the financial impact of this is and then doing education again with physicians and education with all your staff.

2014… The year of U US Inpatient Days

The what’s going on with our patient days. Utilization. We are dropping. Inpatient had a drop of 1.5%, continuing to drop. It looks pretty flat over the past couple of years. If you look at on the bottom right, one of the prospects we were talking to, their discharges were actually down from 2012 to 2013 by 4%. I don’t think we’re going to have deep decreases but this two-day rule will depends on how many patients you had or that fit into that two midnight rule. But it’s not coming back. A lot has switched to outpatient. The outpatient grew 2.9%. Our inpatient surgeries declined 2.2%. So again, if you’re doing any future financial projections, it’s not coming back, looking, and it’s not just you, it’s everybody else in your same market. So what can we do on the outpatient side, what’s going on in your particular market and definitely something you want to look at the trends on.

2014… The year of V Value Based Purchasing

Value-Based Purchasing started in 2013 with a 1% reduction. By 2015, we’re up to a 1.5% reduction. We’re adding new measures, as we mentioned earlier, in 2015 for the PSI and the Patient Safety Index and CLABSI. Also adding the Medicare Spending per Beneficiary. In 2014, it’s going to be, you’re going to be paid on these kind of waiting factors, 25% in the outcome measures, 30% in the patient experience, and 45% in the clinical process. So, they are continuing. And in 2015, when we switch over that, efficiency measure is going to be worth 20%. Now, if you just look at over the years, it’s starting to add up. So again, these are different programs, different data needs, but again, being able to pull it out, being able to see where you are, where you’ve been over time, and how you compare to national data will be very important for everyone.

2014… The year of W Waste

Waste. This is a chart that has been used before that we have so much waste in our system, so how can we get at it. It was a 2012 study done by CMS. But we have a lot of waste in healthcare, so how do you get at it? And again, it’s this whole begs and needs, gee, I need data, I need to know where are my care coordination is, what’s going on with it, am I over-treating, am I ordering tests that are considered so wasteful. So it’s something again everybody just has to dig into and it’s a good place to start.

2014… The year of X Y Z Extra Yellow Zebra – Year of the Horse

My ending. I have to say I ran out of energy while I was doing this. So I thought XYZ, what is there within healthcare. So I did extra yellow zebra. It is also the year of the horse this year. I was in the Bay Area a long time and did a lot of, always went to the Chinese New Year celebration. So this is the year of the horse. So our little yellow horse is there. So we have enough to work on, we don’t need the XYZ kind of thing. So it made me nervous all the things that we have to work on in healthcare.

Questions and Answers

[Tyler Morgan]
Alright. Well, we’re just about to start our questions and answers portion of the webinar. Before we do though, I am just dropping in a Survey Monkey link into the chat box within your control panel. You should be able to click on that link. And if you click on this link, this is just a quick one-question survey based on all of these many different trends that you see. The question I believe is asking you to select the top 5 or up to 5 of those trends that you feel will most affect your organization in this next year.

Now what?

So, while you go ahead into that, we’re going to pull up our questions. We’ve got lots of great questions here folks. So, let’s take a look here and see what we’ve got here.

Tyler Morgan: The first question that I see from — Ryan (51:19) asks, “We are seeing the same trends in the commercial ACO market, namely the lack of adoption out west. Why do you think the west lacks here compared to the other parts of the country?”

Bobbi Brown: Well the west, in California, there is Kaiser, which has a dominant presence in the market, and they are physicians, hospitals and an insurance company combined. So that’s one area. I thought that. It was my only thought.

Dan Burton: Well, I’ve got the same thing and the Kaisers isn’t formally an ACO but they really act like an ACO. So it may be a bit of a skew (52:00).

Tyler Morgan: Okay. Joseph Quinn asks, “Do you think that rise of ACOs indicate US Health System is moving to two tiers of service, one government insurance funded and one private insurance funded?”

Dan Burton: So this is Dan, I’ll take a stab on – what we see is certainly there is a trend towards some of the government-led cuts, in particular pushing health systems across the board to look more towards waste reduction and require more ability to access their data too for the recording requirements. But we certainly see with our health system clients that payers are quickly following (52:46) in very similar ways. So it feels as though the entire market is headed in a very similar direction.

Bobbi Brown: Yeah, I don’t think we’ll have two tiers of service but I do think the pressure is going to be increasing on the cost side and the quality side.

Tyler Morgan: Okay. Aike Allison asks, “Can you please define what patient experience entails?”

Bobbi Brown: Oh it’s the measurements on the value-based purchasing. They are questions that come from usually facilities that will participate with a vendor like Prescany or (53:30). And your patients answer questions about you. The one I always like is they’re quiet at night. Nobody gets a good score that’s quiet in the hospital. If they ask about your experience with physicians, your experience with nurses, then the overall question, would you recommend this facility in the future is kind of the end of all question. So there is a series of 8 questions that Medicare uses for the patient experience. When you actually subscribe to (54:01) picker, you get more questions that are asked and this is the way where I’ve been and again you want to drill down, you want to find out what people are saying and get this whole consumer-focused.

Tyler Morgan: It looks like we’ve got time for two more questions before we end. Please continue to type in your questions. If we don’t get to your questions by the end of this webinar, we will talk to you or respond to with those answers.

The next question I’d like to ask here is…George here asks, “What are the market segments in the outpatient space that you think will see the most growth outside of the ambulatory surgery centers?”

Bobbi Brown: I think there is going to be more growth in imaging. The consumer, again, when I worked with the facility, consumers wanted this location-wise. They didn’t want to have to drive to a big hospital to get stuck in the parking lot. They wanted to be able to go to an outpatient setting for this. So there’s been more and more what’s then outpatient physician office is growing. I was in one hospital group and we were moving more and more, anything we could we were moving to the physician side to get physicians involved in occupational health, any of those kind of outpatient areas that might thought of imaging. So anybody else?

Dan Burton: That’s right.

Tyler Morgan: Alright. So our last question for right now from…Mike McCourty asks, “With the rise in M&A activity, driving the need for integrated data warehousing, how are organizations addressing governance?”

Dan Burton: That’s a very good question. I think that is another (55:45) trend that we will see in 2014 is the errand. It becomes a lot less optional to address governance upfront, and in some ways the fact that there is an organizational change in terms of an acquisition or a merger can facilitate the discussion earlier on about data governance. We’ve just gone through this with a couple of our clients and if we can get out in front and use that specific event as an opportunity to highlight how important it is to have C level governance in place, then it can work really well. Where we’ve seen problems and we’ve experienced problems in working with health systems is when there’s the desire to wait on the setup of data governance and focus for some of the technology, that it’s a real temptation because it’s often slow and quite challenging to get everybody on the same page, enable the commitment to the time and energy required to form a good data governance structure. But we have yet to see, in our experience, significant success, system-wide success, using data to improve care and particularly to reduce inefficiency without the right kind of data governance in place.

Tyler Morgan: Alright. Thank you so much. Thanks everyone for asking so many great questions. Again, if we’re not able to address your question in this (57:21), we will follow up with you afterwards. So after this meeting closes, you’ll have the opportunity to take a short 6-question survey. Please take a few minutes and fill out the survey, so we can continue to bring you relevant content. Shortly after this webinar, you will be receiving an email with links to the recording of this webinar, the presentation slides. We will also include the results of the Survey Monkey survey that you filled out, and also a link to our online knowledge center where you can sign up for any of our upcoming webinars and do any of our on-demand webinars.

On behalf of Dan Burton, Bobbi Brown, and Paul Horstmeier, as well as the folks at Health Catalyst, thank you for joining us today. Have a great day. This webinar is now concluded.

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