Healthcare: Then, Now and in the Future 04/22/2013

Discussion Topics Healthcare: Then, Now and in the Future Healthcare Now...... Healthcare in the Future Foundations Movement toward Prevention Patient Engagement Provider Transition Payment Reform Performance Analytics

Treating episodes of sickness Fee for Service Provider Focused Healthcare Then…… Non-integrated care Addiction to “volume” Treating episodes of sickness Fee for Service Provider Focused Retrospective Provider centric Patient traveled to the care facility (i.e. no ‘house calls’) Patient history maintained at the provider as a reference for the provider Structured cycles of care for routine physicals, etc. (generated service event) Reactive care delivery based on already existing need for treatment Little or no out of cycle patient/provider interaction that was not generated by the need for treatment Less of an emphasis on ongoing wellness, focus on treatment when needed Payment based on volumes of treatment If results of tests were not readily available the test was simply done again

Healthcare Now ........ The volume of new regulations impacting the healthcare ecosystem is stimulating broad transformation in all segments of the industry. ■ Patient Protection and Affordable Care Act of 2010 (PPACA) ■ American Recovery and Reinvestment Act (ARRA) ■ Sunshine Act ■ Health Insurance Portability and Accountability Act (HIPAA) ■ The Health Information Technology for Economic and Clinical Health (HITECH) ■ Government Stimulus Programs ■ ICD10-CM Rule Set (Department of Health & Human Services) ■ Improper Payments Elimination & Recovery Act ■ Inpatient Documentation Standards ■ New York State HC Reform Act (HCRA) ■ Foreign Corrupt Practices Act ■ Dodd-Frank Wall Street Reform and Consumer Protection Act – Conflict Minerals Provision

The overarching theme driving healthcare transformation is convergence of traditional Patient, Payer, Provider, Life Science roles HC Then HC Tomorrow Non-integrated care Addiction to “volume” Treating episodes of sickness Fee for Service Provider Focused Retrospective Coordinated Integrated Care Focus on Quality and Value Wellness and Disease Mgmt Bundled and at-risk payments Patient Focused (Choice) Real Time and Predictive Personalized Targeted Care Provider centric Patient traveled to the care facility (i.e. no ‘house calls’) Patient history maintained at the provider as a reference for the provider Structured cycles of care for routine physicals, etc. (generated service event) Reactive care delivery based on already existing need for treatment Little or no out of cycle patient/provider interaction that was not generated by the need for treatment Less of an emphasis on ongoing wellness, focus on treatment when needed Payment based on volumes of treatment If results of tests were not readily available the test was simply done again

Foundations of Healthcare Transformation Improved Operational Efficiency, Cost Optimization and Patient Outcomes Prevention Programs and Life Sciences Patient Engagement Provider Transitions to New Service Delivery Models Payers Incentivize Change through Payment Reform Performance Analytics Data Services Technology Enablement Target Operating Model Transformation Regulatory Changes

Prevention Improved Operational Efficiency, Cost Optimization and Patient Outcomes Prevention Programs and Life Sciences Patient Engagement Provider Transitions to New Service Delivery Models Payers Incentivize Change through Payment Reform Performance Analytics Decrease Demand for Costly Healthcare Services Leverage advances in life sciences Target human services programs to avoid costly medical treatments later in an individuals life Develop individualized wellness program s Bend the demand curve for costly medical treatments Improving the human condition to mitigate the adverse effects of health determinants

Patient Engagement Improved Operational Efficiency, Cost Optimization and Patient Outcomes Prevention Programs and Life Sciences Patient Engagement Provider Transitions to New Service Delivery Models Payers Incentivize Change through Payment Reform Performance Analytics Patient Engagement Patients engaged in their own care An expectation of information availability in healthcare Patients will seek information that allows them to participate in not only their healthcare decisions, but also in their own wellness Participation may manifest itself in many ways: Changed personal behavior that is more consistent with ongoing wellness Greater out of cycle contact and interaction with practitioners using technologies such as messaging and mobile applications In home use of wireless devices to monitor the wellness and, in some cases, the recovery of patients Resulting in fewer costly hospital recovery stays Patient retention and review of the information in their own EHR or PHR, seeking to recognize patterns of improvement or wellness decline, etc.

Provider Transition Improved Operational Efficiency, Cost Optimization and Patient Outcomes Prevention Programs and Life Sciences Patient Engagement Provider Transitions to New Service Delivery Models Payers Incentivize Change through Payment Reform Performance Analytics Provider Transitions to New Service Delivery Models Providers will begin to embrace patient involvement and interaction outside of the normal treatment cycles Industry moves more toward integrated care that promotes provider accountability Not just for more positive results when treatment is required, but for maintaining patient wellness Preventing the demand for costly treatments proactively Begin to see affiliations of hospitals, providers and those providing specialized support services Effective information exchange across the entirety of the patient engagement

Payment Reform Improved Operational Efficiency, Cost Optimization and Patient Outcomes Prevention Programs and Life Sciences Patient Engagement Provider Transitions to New Service Delivery Models Payers Incentivize Change through Payment Reform Performance Analytics Payers Incentivize Change through Payment Reform Payers will begin to incentivize accountability for wellness Thus decreasing the demand for costly services once a condition has exacerbated to the point that it requires treatment This may come in the form of payment models based on: Capitation Bundled services Some other form that would support the accountability of the provider Some thoughts are also being given to the patient sharing some of the risk in this new accountability model since, after all, a provider can only develop a wellness strategy for an individual, the individual then needs to participate in the strategy execution. Patients may share in the benefit of this model such as in the form of reduced insurance premiums or co-pays for those patients that are willing and effective participants in maintaining their own wellness

Performance Analytics Improved Operational Efficiency, Cost Optimization and Patient Outcomes Prevention Programs and Life Sciences Patient Engagement Provider Transitions to New Service Delivery Models Payers Incentivize Change through Payment Reform Performance Analytics Data Analytics Implemented as a continuous improvement program and opportunity to analyze data for trends Greater comparative effectiveness data Performance ratings of hospitals and providers Correlation between dollars spent and patient outcomes Identification of redundant or unnecessary treatments or services to facilitate cost optimization decisions. Enhanced ability to make more data based decisions As access to more and more data is realized the opportunity for discovery due to data overlays increases Constant identification of patterns that would allow for consideration of process improvements, cost optimizations and more effective treatments that might benefit populations in general or specific demographics that may be most at risk.

Thank you

John Teeter Managing Director, Global Center of Excellence for Health jteeter@kpmg.com © 2013 KPMG, LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International Cooperative (“KPMG International”).