1. ACHIEVING VALUE IN HEALTHCARE: Some Experiential-based Observations ACHIEVING VALUE IN HEALTHCARE: Some Experiential-based Observations Kenneth W. Kizer, M.D., M.P.H. President and CEO National Quality Forum June 17, 2004

2. Presentation Overview  VA transformation - a case study in achieving better healthcare value  Personal reflections on achieving better value in healthcare based on experience with California Department of Health Services, esp MediCal and other publicly funded healthcare programs U.S. Department of Veterans Affairs National Quality Forum

3. The VA Health Care System

4. VA Health Care-Core Missions  Medical care  Health professional training  Research  Emergency management  Homelessness

5. RE-ENGINEERING VA HEALTH CARE

6. VA Transformation... Basic Premise If the VA healthcare system cannot demonstrate that it provides equal or better value than the private sector then it should not exist.

7. What is Healthcare Value?  V = Value  C = Cost/price  A = Accessibility  TQ = Technical quality  FS = Functional status  SS = Service satisfaction V = A+TQ + FS + SS C

8. VA Transformation… Critical Strategic Goals (Vision) VA Healthcare will:  Provide a seamless continuum of care;  Provide high quality care “consistently and predictably”; and  Provide superior value.

9. VA Transformation... Operational Restructuring  Create a new organizational infrastructure Veterans Integrated Service Networks (VISNs) Strategic healthcare groups (headquarters)  Create a new operational model Universal primary care Care management Standardized benefits Emphasis on ambulatory care

10. VA Transformation... Key Structural & Process Changes  Change Governing Laws Eligibility reform Contractual authority Enrollment system  Rationalize resource allocation Design and implement a new resource allocation system (VERA) Diversity funding base

11. VA Transformation… Rationalize Resource Allocation  Basic Care - $2,857 (PMPM - $238) 96% patients 62% funds  Complex Care - $36,955 (PMPM - $3080) 4% patients 38% funds Veterans Equitable Resource Allocation (VERA) Methodology - FY 1999

12. VA Transformation... Key Structural & Process Changes  Modernize information management Implemented EHR systemwide Standardize information systems  Implement an accountable performance management system Align vision and mission with quantifiable strategic goals Identify performance indicators for strategic goals Hold managers accountable for achieving results

13. RESULTS AT FIVE YEARS

14. VA Transformation… Selected Results: FY 1995-1999  Implemented universal primary care  Closed 55% (28,886) of acute care hospital beds  Reduced BDOC per 1000 patients by 68%  Increased patients treated by >24% (700,000)  ~350,000 (36%) fewer admissions per year  48% increase (25 to 37 million) in ambulatory care visits  Decreased staffing by 12% (25,867 FTEEs)

15. VA Transformation… Key Structural and Process Changes

16. VA Transformation… Selected Results: FY 1995-1999  Increased ambulatory surgery from 35% to >75% of all surgeries  Established 302 new community-based outpatient clinics (no new $)  Merged the management and operations of 52 hospitals into 25 locally integrated systems  Eliminated 72% (2,793) of all forms and automated the rest  Universal access and identification card  25% decrease in per patient costs (constant dollars)

17. Comparison of VA and Medicare Performance: Preventive Care Clinical Area Performance Rate (%) VAMedicareVAMedicare 1997-19991997-1999 20002000-2001 Influenza Vaccination 7166 7871 Pneumococcal Vaccination 73468164 Mammography 89569077

18. Comparison of VA and Medicare Performance: Outpatient Care Clinical Area Performance Rate (%) VAMedicareVAMedicare 1997-19991997-1999 20002000-2001 Diabetes Annual HbA1c Annual Eye Exam Bi-annual Lipid Screen 91 73 71 69 57 94 67 89 70 74 60

19. Comparison of VA and Medicare Performance: Inpatient Care Clinical Area Performance Rate (%) VAMedicareVAMedicare 1997-19991997-1999 20002000-2001 Acute MI ASA < 24h ASA at D/C Beta Blockers at D/C ACEI if EF < 40% Smoking Cessation 96 95 93 NM 84 85 72 69 39 93 98 95 90 62 84 78 71 38 Congestive Heart Failure EF checked ACEI if EF < 40% 92* 94* 65 69 94 93 71 66 *1999 only

20. VA Transformation… Surgical Mortality and Morbidity Rates  Overall 30-day mortality and morbidity rates dropped 9% and 30%, respectively, from 1994 to 1997 with no change in patient risk profile  Mortality rates lowest or equal to U.S. lowest for Colectomy Abdominal aortic aneurysm repair Carotid endarterectomy Cholecystectomy Hip replacement

21. VA Transformation… American Customer Satisfaction Index  80 percent of VHA users experience more satisfied now than two years ago.  VHA’s score on the index is 79 (the score for private hospitals is 70).

22. SOME REFLECTIONS

23. Increased value (higher quality, reduced cost and more satisfied customers) can be achieved relatively rapidly – notwithstanding the complexity of healthcare.

24. To Achieve Better Healthcare Value 1. Must identify priorities. 2. Have a clear and easy to understand vision of the desired change 3. Focus on critical change levers 4. Have a coherent, generic plan that can be quickly modified and locally adapted, as needed

25. Critical Change Levers 1. Performance measurement 2. Public reporting of performance data 3. Payment policy (must align payment policy with desired outcomes) 4. Information management 5. Promote a “value-oriented” culture

26. The future is not what it used to be!