1. State of Reform Conference
2016 California Hospital Risk Outlook
November 6, 2015
Presented by: David V. Axene, FSA, FCA, CERA, MAAA
President & Consulting Actuary
Axene Health Partners, LLC
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2. Axene Health Partners, LLC
Overview
Background of Axene Health Partners, LLC
AHP Hospital Risk Outlook Report Series
Key Findings
Q&A and Wrap-Up
2/15/2019
Axene Health Partners, LLC

3. Axene Health Partners, LLC
Independent health care consulting firm (i.e., actuaries, physicians, and IT experts)
Consult with health plans, health systems, governments, etc.
Strong managed care focus, emphasis on clinically sound actuarial analysis
Started here in California, have expanded nationally, centers of excellence in California, Pacific Northwest and Western Pennsylvania.
2/15/2019
Axene Health Partners, LLC

4. AHP Hospital Risk Outlook Report Series
Focused on efficiency of hospital inpatient services
2016 California Report just released
Other states will soon be released
Results are useful to project potential overall health care savings based upon the projected inpatient savings opportunity (i.e., Total Opportunity = 1.5 x Inpatient Potential).
2/15/2019
Axene Health Partners, LLC

5. Potential % Improvement Savings Potential $ Savings (Billions)
Key Findings
California hospital inpatient costs can be reduced by as much as 25% (i.e., $10 billion from the 275 studied hospitals)
Greatest percentage Statewide improvement is with Medi-Cal patients. Greatest dollar potential is with Commercial patients.
Commercial carriers pay 60% more than the average net payment rate while Medi-Cal and Medicare pay less than the average (i.e., significant cost shift to private sector).
Overall California discharges are coded more complicated than national norms.
Payer
Potential % Improvement Savings
Potential $ Savings (Billions)
Commercial
24.5%
$3.7
Medi-Cal
27.7%
$3.6
Medicare
23.5%
$2.7
Other
26.1%
$0.4
Total
25.3%
$10.4
2/15/2019
Axene Health Partners, LLC

6. Key Findings continued
Only a very minor correlation between net patient charges and efficiency.
2/15/2019
Axene Health Partners, LLC

7. Key Findings continued
Least efficient care happens in major metropolitan areas with some notable exceptions (i.e., Sacramento, San Diego, Kern County)
2/15/2019
Axene Health Partners, LLC

8. Key Findings continued
The smallest facilities tend to be the most efficient
Public hospitals tend to be the least efficient compared to for-profit and non-profit hospitals.
Top 20 most efficient hospitals in California
2/15/2019
Axene Health Partners, LLC

9. Axene Health Partners, LLC
Bottom Line
There is significant potential for reducing the cost of care in California
2/15/2019
Axene Health Partners, LLC

10. Q&A and Wrap-Up