1. Kirkland A. McGhee VP & Regional Counsel Kaiser Permanente of Georgia
Understanding the Business/Legal Implications of Integrated Delivery Systems From the Perspective of the Health Plan
American Health Lawyers Association Healthcare Liability and Litigation, Hospitals and Health Systems, and Regulation, Accreditation, and Payment Practice Groups Joint Annual Luncheon
June 26, 2012
Kirkland A. McGhee VP & Regional Counsel Kaiser Permanente of Georgia

2. The Opportunities in Integrated Delivery Systems (IDS)
Understanding the Business/Legal Implications of Integrated Delivery Systems From the Perspective of the Health Plan
THE Challenge for Health Care in the United States is Controlling Costs
Regardless of the U.S.Supreme Court’s Decision on the Affordable Care Act, There Must be Better Structural Alignment Among Patients, Providers, and Payers
The Opportunities in Integrated Delivery Systems (IDS)
The Challenges of Building Successful IDSs
Learning from the Kaiser Permanente Model

3. THE Challenge for Health Care in the United States is Controlling Costs
Health expenditures in the United States neared $2.6 trillion in 2010, over ten times the $256 billion spent in [1] The rate of growth in recent years has slowed relative to the late 1990s and early 2000s, but is still expected to grow faster than national income over the foreseeable future. [2]
1 Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, National Health Care Expenditures Data, January 2012.
2 Robert Wood Johnson Foundation, High and rising health care costs: Demystifying U.S. health care spending, October 2008.

4. THE Challenge for Health Care in the United States is Controlling Costs
This Cost Trend is Unsustainable for Business, Government and Individuals.

5. The Way We Pay for Care There are Many Reasons for the Upward Trend:
THE Challenge for Health Care in the United States is Controlling Costs
There are Many Reasons for the Upward Trend:
Technology
Chronic Diseases from Life Style and Consumption
Cost Shifting Uncompensated Care/The Uninsured
Aging Population
The Way We Pay for Care

6. We Pay for Filled Hospital Beds We Pay for Care by the Unit
THE Challenge for Health Care in the United States is Controlling Costs
We Pay for Sick Care
We Pay for Filled Hospital Beds
We Pay for Care by the Unit
We Pay for Care based Largely on the Interests of Providers and Payers

7. When You are a Hammer Everything Looks Like a Nail
THE Challenge for Health Care in the United States is Controlling Costs
When You are a Hammer Everything Looks Like a Nail

8. A Fundamental Change in How We Pay for Health Care Must Occur.
There Must be Better Structural Alignment Among Patients, Providers and Payers
A Fundamental Change in How We Pay for Health Care Must Occur.
We Cannot Continue to Incentivize Pay:
for Sick Care Only
for Filled Hospital Beds
for Care by the Unit
for Care based Largely on the Interests of Providers and Payers

9. There Must be Better Structural Alignment Among Patients, Providers and Payers
We Must Incentivize Better Structural Alignment Among Patients, Providers, and Payers

10. Shared Savings – the Promise of IDS
There Must be Better Structural Alignment Among Patients, Providers and Payers
Shared Savings – the Promise of IDS

11. Doctors as the Managers of Patient Care and Claims
There Must be Better Structural Alignment Among Patients, Providers and Payers
Doctors as the Managers of Patient Care and Claims
Hospitals as the Mangers of Patient Care and Claims
Payers as the Managers of Patient Care and Claims

12. There Must be Better Structural Alignment Among Patients, Providers and Payers
“The mixed history of physician groups and physician-hospital organizations to successfully manage financial risk suggests that this is not a skill that many have mastered.” – Victor R. Fuchs, PhD and Leonard D. Schaeffer, Journal of the American Medical Association, June 6-Vol 307, No.21, pp

13. There Must be Better Structural Alignment Among Patients, Providers and Payers
“The List of Jokes about Insurance Companies Managing Patient Care is Too Long to Imagine!” – Kirk McGhee, AHLA Annual Meeting, June 26, 2012

14. Learning from the Kaiser Model
A Little About the History of Kaiser Permanente
Henry J. Kaiser
Sidney Garfield, MD
The Tahoe Agreement

15. Learning from the Kaiser Model
Kaiser Foundation Health Plans
Permanente Medical Groups
Kaiser Foundation Hospitals
Kaiser Permanente Medical Care Program

16. Learning from the Kaiser Model
Kaiser Foundation Health Plans
Kaiser Foundation Hospitals
Permanente Medical Groups

17. Learning from the Kaiser Model
Medical Service Agreement
The Constitution for the Enterprise
Annual MOU for Planning, Enterprise Budgeting, Payments Methodologies
Exclusive Partners

18. Learning from the Kaiser Model
Advantages:
Autonomous Physicians Creating Medical Protocols, Focusing on Wellness, and Making Clinical Decisions
“Medical Group shall be solely responsible for the rendition of all medical services, without intervention in any manner by Health Plan or its agents or employees”
Separate Regulatory Regimes
Planned, Budgeted, Predictable Delivery

19. Learning from the Kaiser Model
Reflective or Joint Management Structures
Incentives for Health Improvement
Kinder, Gentler, Insurer
Enterprise-minded Practitioners

20. Learning from the Kaiser Model
Disadvantages:
Duplicative
Sometimes Contentious
Slower
Role Confusion
Regulatory Confusion

21. Learning from the Kaiser Model
The Structural Alignment Should:
Acknowledge the Autonomy of Physicians and the Specialized Knowledge They Possess.
Create Opportunities for Leadership by Each Entity and the Opportunity for Dependency as Well.
Reflect a Shared Enterprise Mentality.

22. Learning from the Kaiser Model
The Opportunity for Health Care Lawyers

23. Learning from the Kaiser Model
Thanks for Your Attention. Questions?