1. EVP, Chief Medical Officer CEO Advocate Physician Partners
Perspectives on Delivery and Payment Innovation – The Advocate-BCBSIL Experience – Advocate Perspective
Lee Sacks, MD
EVP, Chief Medical Officer
CEO Advocate Physician Partners
American Health Lawyers Association Antitrust, Business Law and Governance, and Physician Organizations Practice Groups Joint Annual Luncheon
Chicago, IL
June 25, 2012

2. Advocate Health Care $4.7 Billion annual revenue AA rated
11 Acute Care Hospitals
1 Children’s Hospital
5 Level 1 Trauma Centers
4 Major Teaching Hospitals
4 Magnet Designations
Over 250 Sites of Care
Advocate Medical Group
Dreyer Medical Clinic
Occupational Health
Imaging Centers
Immediate Care Centers
Surgery Centers
Home Health / Hospice

3. Advocate Physician Partners
Physician Membership
1,200 Primary Care Physicians
2,800 Specialist Physicians
Total membership includes 1000 Advocate-employed Physicians
Central verification office certified by NCQA
9 Physician Hospital Organizations (PHOs)
230,000 Capitated Lives / 700,000 PPO Lives / 245,000 Attributable Lives
Advocate physician partners is a very large and complex organization
Advocate Physician Partners delivers services throughout Chicagoland. and central Illinois 3

4. Why Now? Advocate and Blue Cross concluded we are both at risk
Option 1) Lower unit cost now
Option 2) Collaborate to reduce waste over 3 years
Prepares for Medicare value-based purchasing
Prepares for Medicare Shared Savings Program - MSSP (ACO)
Prepares for Exchange price point in 2014

5. Blue Cross Contract Highlights
Blue Advantage (BA) small network HMO added APP to network Feb. 2011
HMOI – Risk-adjusted global cost of care
PPO - Shared Savings Model
Measured on attributable patients
Focus on trend in the total cost of care
Need to attain outcomes, safety, and service targets

6. Changing Paradigms From TO Silo Care Management
Enterprise Care Management
Episodes of Care
Coordination of Care
Discharges
Transitions
Utilization Management
Right care, at the right place, at the right time
Caring for the sick
Keeping people well
Production (volume)
Performance (value)

7. APP Board and Committee Structure
APP Board of Directors
Class A- Physician
Class B - System
Contract Finance Committee
Utilization Management Committee
Quality & CI Improvement Committee
Credentialing Committee
1,200 PCPs + 2,800 Specialists = 4,000 Total Physician Members
Average Group Practice Size 2.5

8. 2011 Initial Priorities 8 ENTERPRISE CM Enhanced Inpatient CM
Outpatient
CM for 3-5%
high risk patients
PRIMARY CARE
ACCESS
PC Access/
Virtual Visits
Multi-Condition
Centers
POST-ACUTE
SNFist Model
Post- Acute Network Development
Transition Coaches
DATA &
ANALYTICS
ECM Information System
Risk Stratification
MARKET SHARE
GROWTH
Physician Loyalty
ED Unassigned Patients
New Patient Acquisition 8

9. Collaboration and Trust Required
Health System and Physicians Take Relationship to New Level
Weekly conference with Blue Cross
Monthly senior executive meetings with BC
Creating Dashboard for Both Organizations
President of BCBSIL Speaks at Advocate Board Retreat
AdvocateCare Oversight Council

10. Spend For Advocate Attributed Patients - CY 2010

11. Attributed Patient Cost Concentration Supports Care Management Model
Verisk Categories
Person Years
Predicted Expenditures
Number
Percent
Mean $
Very Low Risk
54,398
30.5% $ 3%
Low Risk
78,520
44.1%
$ 4,054
22%
Moderate Risk
24,906
14.0%
$ 11,517
20%
High Risk
16,056
9.0%
$ 24,054
27%
Very High Risk
4,270
2.4%
$ 91,062
Total
178,149
100.0%
$ 7,987
100%

12. Utilization Metrics(PPO) Non-Advocate Attributed
Blue Cross PPO Results Thru Q3
Blue Cross PPO Results
Utilization Metrics(PPO)
Advocate Attributed
Non-Advocate Attributed
Inpatient
Admit Rate/1000
(11.3%)
(8.0%)
Length Of Stay
(1.2%)
(0.7%)
Days/1000
(12.6%)
(8.6%)
Readmit Rate
4.3%
(4.7%)
Outpatient
OP Surgery/1000
(9.4%)
(8.9%)
OP Other/1000
1.0%
(0.2%)
Advance Imaging
(6.0%)
(5.7%)
Professional
Office E&M/1000
(7.0%)
(5.6%) RX
Scripts/1000
(0.9%)
(3.2%) 19

13. AdvocateCare Index Simplify and Focus Length of Stay Admits/1000
ED Visits/1000
30 Day Readmissions
% Days In-Network

14. Learnings Infrastructure takes investment and time ($18M annualized)
Payments/incentives create alignment
Data and transparency drives improvements
Actuaries grow in importance
Predictive modeling is critical
Partnerships grow in importance

15. Learnings Need to reduce cost
Inpatient hospital is biggest $ opportunity
Hospitals/health systems need integrated clinician partners
Physicians need structure, capital, and infrastructure
Payer/provider partnership creates synergies
Medicare is tremendous opportunity

16. Learnings Enterprise Data Warehouses (EDW) grow in importance
Traditional revenue generators in FFS model will be less attractive investments
Managing the information becomes critical success factor in population health