The Industrialization of Healthcare: Driving Value Through Technology & Analytics Brad Ryan, M.D. General Manager IMS Payer and Provider Solutions Oct. 16, 2012

1 in 5 Medicare FFS patients readmit within 30 days of discharge1 Market opportunity Readmissions Coordination of Care Pharmacy 20% $300B $500B 1 in 5 Medicare FFS patients readmit within 30 days of discharge1 Treating 60% of high-cost chronic condition patients yields $300B in savings over 10 years3 8% of total health expenditure = $500B globally can be avoided with optimized use of medicines5 21K $62B 50% Organized into categories of Compliance/Readmissions …Coordination of care….Pharmacy…. 20%- Research shows that nearly one in five Medicare patients in the Fee-for-Service (FFS) program had readmissions within 30 days of discharge from a hospital stay.1 21K- Roughly 13.4% of acute myocardial infarction Medicare admissions were followed by a readmission within 15 days, accounting for nearly 21,000 admissions at a cost of $136 million. 2rdination of Care $300 Bn - Reducing the cost of treating 60% of high-cost patients with chronic conditions could yield savings of $300 billion over 10 years. 3 $62Bb - A total of 1.1% of global total health expenditure (THE), or 62bn USd worldwide, can be avoided if timely treatment is provided.4 $500bn -8% of total health expenditure or about $500Bn per year globally, can be avoided with optimized use of medicines, which would prevent avoidable Hospitalizations’ and improve medicine use.5 50% - Over 50% of prescriptions are not taken as directed6 estimated to drive up to $290 billion in additional care costs per year7 All sources in footnotes FYI -- Others (Adherence, chronic Disease, etc.) $3 - Of every $4 spent on health care is attributed to patients with chronic diseases, or nearly $7,900 for every America with a chronic disease 32 million – Additional individuals that may gain coverage as a result of legislative changes due to health care reform 25% - Proportion of revenue that 40% of hospitals believe will be tied to performance- based reimbursement 140 million – People who live with chronic conditions and disabilities that require complex care coordination across multiple providers in the US. 20% - Proportion of Medicare patients that are readmitted within 30 days after a hospital discharge, and over half of these patients don’t see a physician between discharge and readmission 25% - Patients with coronary artery disease who discontinued drug therapy within 6 months 30% - The one-year risk of hospitalization for diabetes patients with low adherence versus 13% for patients with high adherence $290 Bn – The current annual; cost of poor adherence 75% - Proportion of US healthcare spending that goes towards the treatment of chronic disease 21% - Better adherence for diabetes patients who received bi-weekly automated assessment calls and self-care training by a nurse than those patients that received usual care   AMI readmissions 13.4% or 21,000 AMI Medicare admissions readmit within 15 days, at a cost of $136M2 1.1% of global total health expenditure or 62B worldwide, can be avoided with timely treatment4 Prescriptions not taken as directed6 drive $260B in additional care costs7 Sources: 1—Jencks SF, Williams MV, Coleman EA. Rehospitalizations among Patients in the Medicare Fee-for-Service Program. New England Journal of Med. 2009;360(14):1418–28 2— MedPAC. Report to Congress: Promoting Greater Efficiency in Medicare, Oct 2008 3— David Blumenthal, MD, “More focus on high-cost patients could save $300B,” Healthcare Finance News, Apr. 2012 4,5,7— IMS Institute, Advancing the Responsible Uses of Medicines, October 2012 6— Lars Osterberg and Terrence Blaschke, “Adherence to Medication,” New England Journal of Medicine, 2005 IMS Provider & Payer Solutions – StrataRx Conference Copyright ©  2012 IMS Health.  All Rights Reserved.

In·dus·tri·al·i·za·tion 3 bar treatment In·dus·tri·al·i·za·tion 1 a historical phase, producing overall change in circumstances and resources of production or industry characterized by individual judgment; manual labor replaced by mechanized mass production, use of technological innovation to solve problems, as well as more efficient division of labor the large-scale introduction of manufacturing, advanced technical enterprises, and other productive activity into an area, society or country A historical phase, producing overall change in circumstances and resources of production or industry 2 Characterized by individual judgment; manual labor replaced by mechanized mass production, use of technological innovation to solve problems, as well as more efficient division of labor Explain session title and set-up for next slide on intelligent hc systems Touch on color key points Modified slightly from Dictionary.com and http://www.investopedia.com/terms/i/industrialization.asp#ixzz203654xKw 3 The large-scale introduction of manufacturing, advanced technical enterprises, and other productive activity into an area, society, country IMS Provider & Payer Solutions – StrataRx Conference Copyright ©  2012 IMS Health.  All Rights Reserved.

New expectations of what’s possible Intelligent People Intelligent Tools Intelligent Systems Point-in-time Apprentice model Judgments “Art of medicine” Highly specialized Technology & clinical advances Vast treatment options Disparate patient experiences Limited comparisons Patient-centered Technology-enabled Clinical evidence driven Guidelines & protocols Reduced treatment variation Updates: Intelligent Tools – pacemaker image in icon System – connected network icon image Script notes: Use transportation analogy….History of healthcare is much like the history of other industrialized functions, take transportation for example. Intelligent individuals The early days of healthcare and even into the mid-20th century, we had smart doctors – highly intelligence individuals, highly skilled, but limited in capabilities and tools – not to mention the populations’ limited access to these highly sought out professionals – who relied upon trial and error judgments to determine what the best treatment was for their patients – highly influenced by personal perspectives, experiences, education, geographic location, available assistance, medication and techniques – etc. Point-in-time view Knowledge and experience via apprentice model Trial-and-error and cost-benefit judgments “Art of medicine” Superstar Mechanisms/Tools In the late 20th century, we found ourselves racing from the model T to highly-specialized Formula One race cars – or in Healthcare terms, highly specialized physicians, high-tech machines/robotics, in highly specialized facilities – with networks of renowned specialists – yet still dependent on human judgment. When to use which treatment and on which patients — still matters of judgment, not measurement. The decision is, once again, left to a doctor’s informed intuition. As a result, different doctors frequently end up coming up with different answers to the same question. Making our HC system vastly more expensive than any other country’s, but our results are not vastly better. Highly specialized professionals; advanced tools Technology & clinical advances using evidence produced and consumed by the community Vast number of options; informed intuition and best available information Disparate patient experiences; limited ability to compare Intelligently Run Healthcare Systems – system of the near, not distant, future Based on analytics – total patient views, outcomes tracking, measurement and benchmarking, -- real word evidence, etc. What healthcare could look like. Patient-centered view across treatments, sites, providers Technology enabled Based on clinical evidence, driven by guidelines & protocols Reduced treatment variation and greater efficiency Interesting source material: http://www.nytimes.com/2009/11/08/magazine/08Healthcare-t.html?_r=1&pagewanted=all – Foundation of Any Industry + Quality + Safety + Cost + Quality + Safety - Cost IMS Provider & Payer Solutions – StrataRx Conference Copyright ©  2012 IMS Health.  All Rights Reserved.

What would it take to create this intelligent system? Audience interaction question IMS Provider & Payer Solutions – StrataRx Conference Copyright ©  2012 IMS Health.  All Rights Reserved.

Insights at Right Time, Right Place Mobile Tools Patient Centric Data Insights at Right Time, Right Place Technology What would it take to create this intelligent system? Physician Engagement Potential audience answers Big Data Capabilities Incentives Collaboration IMS Provider & Payer Solutions – StrataRx Conference Copyright ©  2012 IMS Health.  All Rights Reserved.

Comprehensive, connected healthcare data & analytics Medical Claims Integrate 7 Billion Transactions / Year Prescribers 1 Million Tracked Weekly Rx Information 3.0 Billion / Year Healthcare Visits 9M Inpatient & 96M Outpatient / Year Longitudinal Rx 2.4 Billion / Year A SINGULAR VIEW Near-census treatment insights Dynamic representation of total patient care Disparate data sources integrated Privacy protected, encrypted Groups/IDNs 760 Entities Clinical Specialties All, including cardiology, neurology, oncology Treatments 70+% Dispensed Prescriptions Payers / Plans 8,000 Plans Providers 1M+ professionals, 1M organizations & 2M affiliations Consumers 130M Consumer Profiles Unique Patients 260 Million / Year IMS Provider & Payer Solutions – StrataRx Conference Copyright ©  2012 IMS Health.  All Rights Reserved.

The power of linked, real-world patient data What is known about patients outside a facility? membership? episode? Pharmacy/ Prescription Retail OTC Medical Office /Clinic Behavioral & Demographics Hospital Inpatient/ Outpatient Laboratory/ General EMR Labs Long–Term Care Patient/ Consumer ID Patient ID Patient ID Patient ID Patient ID Patient ID Physician IDs (referring & rendering) Prescriber IDs Physician IDs Physician IDs (referring & rendering) Physician IDs Physician IDs IMS Provider & Payer Solutions – StrataRx Conference Copyright ©  2012 IMS Health.  All Rights Reserved.

“Big Data,” more than a data warehouse Data Lifecycle Stage 0: Data Preparation Stage 1: Data Collection Stage 2: Data Transformation Stage 3: Building Intelligence Stage 4: Application Delivery Stage 5: Knowledge Management Identification Qualification Preparation Implementation Quality Assurance Validation / Certification Product Integration Training Medical / RX EMR Wholesaler Hospital Survey Data On-Site Clinic OTC Dental / Vision Lab Results Data Privacy Protection Standardization Customization Enhancement Quality Assurance Quality Improvement Integration Proprietary Methods Episodes of Care Performance Measures Disease Staging Norms / Benchmarks Market Scan Provider Clinical Measurement SFE Commercial Analytics R&D Pharmacy Pharmacy Benefit Strategies Consumer Program Integrity Government Data Analytics Consulting Services Emphasizes our unique ability to handle industrial-strength data and convert to intelligence GLOBAL IMS Provider & Payer Solutions – StrataRx Conference Copyright ©  2012 IMS Health.  All Rights Reserved. 9

In what ways can big data add system intelligence? Audience interaction question IMS Provider & Payer Solutions – StrataRx Conference Copyright ©  2012 IMS Health.  All Rights Reserved.

Convergence of unmet need Manufacturers & Distributors Pharmacies, Other Suppliers Hospitals & Health Systems PBM Care/Disease Management QUALITY ACCESS Clinicians COST UNCERTAINTY Patients, Consumers, Caregivers Health Plans Employers HIT, HIE, EMR, Portals Government Players and roles differ by geography or construct Common themes across stakeholders and geographies IMS Provider & Payer Solutions – StrataRx Conference Copyright ©  2012 IMS Health.  All Rights Reserved.

Key applications for advanced analytics Four areas of greatest impact to improve value Coordinate Integrated Patient Care Reduce Wasteful Variations Engage Physicians and Patients Support Pay-for-Performance Measure, benchmark, and track performance to reduce wasteful variations and achieve best practice in care delivery Profile, segment, attract, and engage at the physician and patient level Recognize and reward performance for risk sharing, value-based purchasing and other alternative incentive models Influence and optimize site, channel and resources with a longitudinal view of the patient journey Narrow today to just four key applications with the greatest future impact on healthcare delivery: Reduce wasteful variations in clinical practice Engage the right physicians and patients to improve outcomes Drive increased transparency to support pay-for-performance and risk-sharing models Coordinate integrated patient care across sites and channels IMS Provider & Payer Solutions – StrataRx Conference Copyright ©  2012 IMS Health.  All Rights Reserved.

Reduce Wasteful Variations Increasing quality and efficiency in prescribing, ensuring appropriate Rx use and spend A large national health plan’s pharmacy program Identify opportunities to optimize cost and utilization Demonstrate quality & efficiency Gain insight from comparative benchmarks – national, state, local Inform formulary strategies to drive cost savings and improve patient outcomes Issues: Pinpoint drivers of high prescription utilization and costs and inappropriate Rx use to demonstrate quality and efficiency gains Identify appropriate local comparative benchmarks, had none Identify non-compliant, high cost patients Monitor prescribing patterns Data: Views into network doctors and prescribing near-census patients to measure patient Rx compliance Analysis: Monitor and analyze overall Rx utilization and costs Track utilization & costs for Generic Switch/Formulary Change specific to lipid-lowering agents Generate/analyze quality metrics (e.g., therapy gaps, Rx possession ratio) to ensure appropriate Rx use Monitor & manage chronic care Rx: Diabetes medication dosing High-risk med use among elderly Drug-drug interactions Medication therapy for asthmatics Cholesterol Management Inform formulary strategies Insight for continued cost and efficiency strategic objectives Patient-level information to support quality reporting and communication to stakeholders Multiple doctors and patients, prescribing and compliance behavior Generic switch/formulary change impact Compliance and adherence, care gaps Integrated pharmacy and medical view for chronic management Specialty Identified over $10M in savings in program’s first year Efficiencies via more informed decisions and management of analytics IMS Provider & Payer Solutions – StrataRx Conference Copyright ©  2012 IMS Health.  All Rights Reserved.

Engage Patients Align resources and engage patients with targeted solutions to reduce readmissions A multi-state health system Hundreds of daily discharges Multiple local pharmacies 18-25% readmits within 30 days of AMI, HF, PN admit Monitor Rx fills, compliance, refill history Utilizing IMS proprietary Rx datasets and technology to: Follow patients across the care continuum post-discharge to determine when prescriptions should be filled based on discharge instructions Monitor patient-level prescription fill activity on a daily basis Allow provider to re-identify high-probability sources of Rx-related readmissions via the patented de-identification technology Issue: 18-25% readmit within 30 days of original AMI, HF, PN admission Significant penalties beginning FY2013 Hundreds of daily discharges all go to their local pharmacy post-discharge Data Track Rx fulfillment, compliance, history Analysis Match de-ID’d patients against comprehensive population Rx data Refresh daily, post-discharge By DRG, service line, procedure, case, manager, drug class, etc. Pair Rx compliance data with de-identified patient data to track behavior against discharge instructions Identify high potential readmits, increase patient safety and reduce preventable readmissions Case Mgrs Under-staffed case managers, limited follow-up Reduced follow-up calls by 53% post day 1; + 23% by day 3 Outreach, interventions Targeted interventions with week 1 non-fillers Concentrated time-strapped case mgt resources Improved outcomes for drug-drug adverse effects Reduce readmissions, improve care quality/patient satisfaction and avoid re-admission penalties Improve patient outcomes & avoid readmissions Outreach, engagement, intervention Case managers target right 50% day 1; target additional 25% day 3 Prioritized at-risk patients refreshed daily, post-discharge census Identify patients at high risk for post-discharge non-compliance Reduce readmissions for FY2013-focus DRGs by 34% Increase case management efficiency and resource allocation IMS Provider & Payer Solutions – StrataRx Conference Copyright ©  2012 IMS Health.  All Rights Reserved.

Engage Physicians Track physician referral and prescription patterns to empower alignment strategies Prominent health system, competitive market Doctors affiliation, referral relationships, patient flows, practice patterns/profiles Target right physicians with tailored messaging for engagement and education Lack of visibility into highly complex physician/patient networks PCP-to-specialist Key management relationships Translation to inpatient/outpatient procedures Issue: Scope Primary Care and Specialist relationships across a target market to identify key service line drivers and propel growth in a highly complex, competitive network; Strong appetite for physician employment and alignment Data & Analysis Gain insight into referrals and affiliations via claims data Track PCP-to-Specialist relationships via sample of 80%+ of all U.S. office claims Identify key medical management relationships that eventually translate to hospital inpatient or other outpatient procedures Track referrals through continuum of care within hospital Rx data to track chronic medical management of high-impact patients Target Identify market-defining relationships/future patients and target tailored messages to physician stakeholders Results: Allows establishment of meaningful, quantitative goals for Physician Liaisons function Enables targeted campaigns, tracked effectiveness; meet service-line P&L targets via market share analytics Meaningful, quantitative goals Targeted campaigns, tracked effectiveness Enhance relationships with key market champions Drive nearly $6M of annual top-line growth for target service lines IMS Provider & Payer Solutions – StrataRx Conference Copyright ©  2012 IMS Health.  All Rights Reserved.

Pay-for-Performance Align payers, providers, manufacturers around real-world performance value Integrated smoking cessation service - Germany Order to deliver service & treatment to the patients Understand utilization & success Demonstrate drug value Reduce total utilization Impact study, care delivery, collection of real-world performance data, predictive analytics & modeling IMS Requests administration services & reimbursement Reimbursement on behalf of manufacturer Pharmaco SHI Issues: Value-based drug pricing based on longitudinal therapy benefit assessment Understand utilization & success of smoking cession drug & program Demonstrate value of drug based on real-word data Reduce utilization of healthcare by patients who quit smoking Pharma Company: Manager Investor Acquisition of provider & SHI NI Study Clinical pathways & quality Product delivery Legal compliance IMS Service Center Impact study on cost of smoking Data collection & measurement: Aggregate, manage, analyze data from ALL providers in fund Custom methodology & service solution Neutral party determining performance & payments, administer contracts Patient management: Manage patient engagement and behavior modification, orchestrate patient care delivery Reimbursement of service (SHI) & equity contribution Payment of provider Reporting Predictive analytics and modeling Measures over 4-year period SHI Marketing & Referral of patients Reimbursement of service Evaluation of outcome Public authority compliance Provider Acquisition of patients Acquisition of referral centers Treatment & performance Documentation of patient data Results Patients, payers, providers and manufacturers have real- world evidence of impact of smoking cessation Provider Requests patient treatment Referral of patients Data processing and project management on behalf of provider Win. Win. Win. Reduced HC utilization savings and insight into customer health needs and strategies IMS Provider & Payer Solutions – StrataRx Conference Copyright ©  2012 IMS Health.  All Rights Reserved.

Outcomes-based payment - economics Client perspective Both cessation service and drug sales generate revenue streams Volume Manufacturer Revenue & Brand Sales Service Center Revenue Third party perspective The service center generates revenues on patient base Patients Payer perspective Reduced utilization by patients who stop smoking expected to generate considerable savings SHI Savings from Better Outcomes Patients IMS Provider & Payer Solutions – StrataRx Conference Copyright ©  2012 IMS Health.  All Rights Reserved.

Actively managing patient care quality and reducing cost per patient Coordinate Patient Care Actively managing patient care quality and reducing cost per patient PCMH of a large regional health plan Improve patient quality, reduce spend Support provider care management Measure outcomes, ROI Patient history & benchmark treatment paths 73 performance KPIs Objective analytics and benchmarks PCP grades improve outcome and share financial benefits Issue: PCMH pilot expansion wanted to give physicians the information they need to coordinate care. Also wanted to improve quality and reduce total medical spend; Support information transparency at the point of provider decision making; measure outcomes and ROI Data & Analysis: Use view of patient history to assess care effectiveness, benchmark appropriate use of services with structured approach to patient and care quality management Measure 73 performance indicators Highlight high/low performing providers Calculate illness burden scores Highlight and disseminate care gaps and patient information to MDs with detailed patient level results back to practioners’ online tool Results/Grades Deliver patient-level results to physicians, care coordinators and disease managers in terms of star grades or %s with credible transparent detail they can drill into Aggregated care alerts & patient registries available online Operational efficiencies, optimized resources result in shared financial benefits ID high/low performers Calculate illness burden scores Disseminate care gaps, care alerts Patient-level results to practitioner Online tool to track and understand performance, manage real-time appeals Achieved 2% admissions reduction & saved over $500k annually Actively managed catastrophic & multiple chronic conditions to save >$35k per patient IMS Provider & Payer Solutions – StrataRx Conference Copyright ©  2012 IMS Health.  All Rights Reserved.

Examples of IMS proprietary research to improve healthcare IMS Institute: Unbiased information for policy and decision makers Global health research program Treatment/drug utilization trends and expenditures Comparative effectiveness research Geographic variations in care Real-world practice Script: Overtly mention why only IMS can produce this level of report and link back to breadth of data assets IMS Provider & Payer Solutions – StrataRx Conference Copyright ©  2012 IMS Health.  All Rights Reserved.

Interconnected view across healthcare If we did these 4 things well…what would be different? Government & Employers Hospitals & health systems Treatment sites: pharmacies, labs, imaging, etc. Manufacturers & distributors Patient Script Notes: Illustration for future state… If we did this right, all segments of healthcare would be connected across the continuum of care and all would be focused primarily on the patient Isn’t that the highest level, uber-goal for all of us? Consumers, caregivers Health plans Physicians & HC Professionals IMS Provider & Payer Solutions – StrataRx Conference Copyright ©  2012 IMS Health.  All Rights Reserved.

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