What’s Next for Health Care What’s Next for Health Care? Understanding the current state to get to the future state Julie Lewis Director for Health Policy The Dartmouth Institute for Health Policy & Clinical Practice Presented to the Concord Coalition May 28, 2009

What does health care in the US currently look like?

Healthcare is in Crisis Unsustainable Growth in Spending Pay for Volume, not Value Little to No Accountability for Quality or Cost Gaps & Variances in Care Poor Chronic Disease Management Lack of Care Coordination Disparities by Race and Ethnicity Increasing Uninsured & Underinsured Lack of Information Effectiveness of Treatments Comparative Effectiveness Public Information on Provider Cost and Quality

The Numbers US healthcare costs in excess of $2.5 trillion Recent CBO report suggests waste = $700B/year Patients, on average, receive recommended health care only 55 percent of the time (McGlynn et al. 2003)

Cost: Over half of cost growth in federal spending will be attributed to per capita cost growth Percent of GDP Allocation of Projected Growth in Federal Spending on Medicare and Medicaid by Source Source: Economic and Budget Issue Brief: Accounting for Sources of Projected Growth in Federal Spending on Medicare and Medicaid. A series of issue summaries from the Congressional Budget Office. May 28, 2008

Cost: U.S. Health Expenditures and Workers’ Earnings, 2000–2008 106% 75% Percent 47% 29%

Three fold variation in per capita spending Peter Orszag, N Engl J Med, 2007

End-of-Life Spending Variation at Major US Medical Centers Spending and resource use chronically ill, last 6 months of life Total Medicare spending 50,522 40,181 26,330 Physician visits 52.1 42.2 23.9 Hospital days 19.2 17.7 12.9 UCLA Medical Center Massachusetts General Hospital Mayo Clinic (St. Mary's Hospital)

Where is the variation? More Care in High Spending Regions Less Care in High Spending Regions Evidence-Based Quality Examples: Mammogram, Women 65-69 Pap Smear, Women 65+ Pneumococcal Immunization Aspirin at admission (Heart attack)

Higher healthcare spending is not associated with better quality Source: Baicker et al. Health Affairs web exclusives, October 7, 2004

Where is the variation? More Care in High Spending Regions Less Care in High Spending Regions Evidence-Based Quality Preference Sensitive Care Examples: Total Hip Replacement Total Knee Replacement Back Surgery CABG Following Heart Attack

14 March, 2001 Variation in preference sensitive care exists within ALL regions rather than between regions 2.0 4.0 6.0 8.0 10.0 12.0 14.0 Q1 Q2 Q3 Q4 Q5 Rate of Coronary Artery Bypass Graft Surgery Age-sex-race adjusted, 2001 Rate per 1000 Enrollees HRRs by Spending Quintile Each red dot represents a Hospital Referral Region (HRR)

Where is the variation? More Care in High Spending Regions Less Care in High Spending Regions Evidence-Based Quality Preference Sensitive Care Supply Sensitive Care Examples: Total Inpatient Days/ICU Days Diagnostic Tests Evaluation and Management (visits) Imaging

What do higher spending regions get? 14 March, 2001 What do higher spending regions get? Health Outcomes Slightly higher mortality Patient-Perceived Quality Worse access to primary care Lower overall rating of medical care Lower satisfaction with hospital care Physician’s Perceptions Worse communication among physicians Greater difficulty ensuring continuity Lower satisfaction with career Trends Over Time Greater growth in per capita resource use Lower gains in survival following AMI (1) Fisher et al. Ann Intern Med: 2003; 138: 273-298 (2) Baicker et al. Health Affairs web exclusives, October 7, 2004 (3) Fisher et al. Health Affairs, web exclusives, Nov 16, 2005 (4) Skinner et al. Health Affairs web exclusives, Feb 7, 2006 (5) Sirovich et al Ann Intern Med: 2006; 144: 641-649 (6) Fowler et al. JAMA: 299: 2406-2412 14

What’s going on? Research on causes of regional variations Patient Preference Slight preference for specialists in high specialist regions No difference in wish for test MD says not needed No difference in wish for aggressive EOL care Malpractice Environment Explains less than 10% state differences in spending Capacity & Payment System Payment system ensures that all stay busy Capacity is strongly correlated, but explains less than 50% Clinical Judgment No difference in decisions with strong evidence More likely to intervene in gray areas

What might be going on? Research on causes of regional variations Source: Sirovich et al. Health Affairs. May/June 2008

What about Iowa?

Per Capita Medicare Reimbursements(Part A & B, 2006) Dollars Iowa $6,572/beneficiary States

Per Capita Medicare Reimbursements(Part A & B, 2006) Dollars Dubuque $7,859/beneficiary Iowa City $6,045/beneficiary Hospital Referral Region

Total Medicare reimbursements per enrollee (Part A and B) Area Population Rates Surplus/Deficit *Marshalltown , IA 7,611 4169 - Dubuque , IA 11,082 7586 37,863,403 Mason City , IA 15,814 7495 52,587,171 Clinton , IA 8,196 7086 23,900,376 Davenport , IA 18,135 7041 52,070,779 Waterloo , IA 13,903 7031 39,787,086 Fort Dodge , IA 7,394 6913 20,285,509 Sioux City , IA 15,666 6796 41,150,195 Burlington , IA 8,470 6771 22,037,085 Des Moines , IA 52,517 6412 117,787,060 Ames , IA 7,653 6200 15,539,730 Cedar Rapids , IA 28,327 5999 51,834,360 Ottumwa , IA 5,094 5874 8,680,673 Council Bluffs , IA 9,919 5769 15,866,515 Iowa City , IA 14,041 5605 20,154,443 What if…. If per capita Medicare spending in Iowa was at the Marshalltown level? Saving for… - Just Medicare - Just for Part A & B - Just 2006 Would have been: $520 Million

Standardized Prices Total Medicare Expenditures (Part A & B) National Average

Standardized Prices Inpatient Short Stays National Average

Standardized Prices Hospice Services National Average

Standardized Prices Outpatient Services National Average

Annual Growth Rates of per Capita Medicare Spending Dubuque……………..5.2% Sioux City……………4.9% Waterloo……………..4.2% Des Moines………….4.0% Davenport……………3.5% Cedar Rapids………..3.5% Iowa City……………..2.8% Source: Slowing the Growth of Health Care Spending: Lessons from Regional Variation Fisher, Skinner, Bynum, New England Journal of Medicine, February 26, 2009

Where are we trying to go?

Principles for Reform Better Evidence to Reduce Gray Areas Meaningful Measures of System Performance Meaningful Measures of System Performance Better Evidence to Reduce Gray Areas Focus of Measurably Improving Health Focus of Measurably Improving Health Principles for Reform Rewarding Value, Not Volume Rewarding Value, Not Volume Organizational Accountability for Capacity, Cost, and Quality Organizational Accountability for Capacity, Cost, and Quality Engaged Patients, Informed Choice Engaged Patients, Informed Choice The Right Workforce to Lead the Change The Right Workforce to Lead the Change