Idea 6: Approach to Over Capacity Bob Hoban, Chief Strategy Officer St. John Providence Health System & Ascension Health – East Michigan

Evolutionary Transformation of the Healthcare Industry Care needs are changing in Michigan: Predominant capital investment has been bricks and mortar resulting in excess capacity Future focus: Access to primary care services and chronic disease management Evidence: Per MDCH, Michigan has an excess of over 5,000 beds, on a base of 26,000. In SE Michigan, nearly 3,000 bed excess on a base of 14,000 beds. Change requires: Aligning the economic incentives of hospitals, physicians and other providers to manage the health of a population

Alignment of Economic Incentives Value Base Purchasing will change the incentives of providers - from producing more services to efficacious care (efficient and effective) Bundled or Global payment for an episode of services; Hospital, Anesthesia, Surgeon, Pre-, Post-care Pay for Performance (P4P) on quality of the system of care Global payment for a population over time Providers will respond to economic incentives Drive integration to improve quality outcomes and reduce overall costs Hospitals will become cost centers – the system will adapt

Disease-Centered System of Care

Patient-Centered Medical Home St. John Providence Health System Current Actions to Right Size Capacity Patient-Centered Medical Home Coordinated integrated care emphasizing access, quality and safety 163 SJPHS primary care physicians are currently designated as BCBSM PCMH providers Evaluating effectiveness of serving healthcare needs in three communities with acute care hospitals Examining potential for program consolidation St. John North Shores inpatient rehabilitation consolidating to St John Hospital & Medical Center Continuing to look for other opportunities

Accelerating Industry Change Alignment of economic incentives via Value Based Purchasing initiatives to drive out excess capacity will evolve the industry over a 5-10 year horizon Opportunity exists to accelerate the change process Create a “Reverse Hill-Burton” incentive program