1. Doing Care Differently: The Journey to a Healthier Kentucky Innovate, Accelerate, Collaborate 2014 Howard L. Bost Memorial Health Policy Forum September 16, 2013

2. “Health is a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity.”

3. Health Impact Pyramid (CDC) Factors that Affect Health Source: Georgia Department of Public Health; Centers for Disease Control and Prevention 3 Copyright © 2014 FTI Consulting, Inc.

4. The Institute for Healthcare Improvement (IHI) The Triple Aim U.S. health care system is the most costly in the world Yet, we get the worst outcomes of nearly any industrialized country, even when adjusting for age and income And, Kentucky is among the lowest U.S. states for outcomes, according to the America’s Health Rankings Source: Georgia Department of Public Health http://www.ihi.org/Engage/Initiatives/TripleAim/pages/default.aspx Population Health Per Capita CostExperience of Care 4 Copyright © 2014 FTI Consulting, Inc.

5. The Healthcare Landscape “Digital Health feels like the PC industry in the early ’80′s.” John Sculley – Former Apple and PepsiCo CEO “I think the extreme complexity of medicine has become more than an individual clinician can handle. But not more than teams of clinicians can handle.” Atul Gawande – Surgeon, Author, Journalist “I don’t blame anybody – they’re just doing what makes sense and we have to change what makes sense.” Don Berwick – Former CMS Administrator 5 Copyright © 2014 FTI Consulting, Inc. Perspectives: Healthcare is a different industry than it used to be

6. The Healthcare Landscape The U.S. health market requires greater flexibility and insight than ever before. Leaders increasingly need expert advice to make sound decisions in today’s climate. Regulatory Environment Aging Population Evolving Payment Models State Budget Crises Unprecedented Environmental Change Consumerism Comparative Transparency Workforce Challenges Emerging Technologies Quest for Value The Market Is Complex And Evolving 6 Copyright © 2014 FTI Consulting, Inc.

7. The Healthcare Landscape DemographicsHealthcare Reform Population Growth Population Ageing Chronic Conditions Economic Pressure Governments Employers Market Competition PPACA (US) Other global reform (e.g., GER) ARRA, HITECH for EHR Aggregation, Storage and Analytics Pooling/Open Data Data Center Capacity Telemedicine Wireless Sensors Remote Patient Monitoring Apps/Social Media Genomics Targeted Therapeutics Personalized Treatments Pharma Firms Competing to ‘Own The Disease’ Payer-Provider Integration Incentive Alignment Risk Shifting Consumer Engagement Value Based Benefits Wellness/Preventative Programs Population Models (e.g., PCMHs, ACOs) Condition Oriented Models (COEs, DM programs) Key Drivers Business Model Enablers ConvergenceCare Model RedesignConsumerism Technological Enablers ‘Big Data’Personalized MedicineMobility Various economic, technological, regulatory and social factors are pushing the industry in new directions, creating problems that never before existed. Drivers and Enablers of Change 7 Copyright © 2014 FTI Consulting, Inc.

8. The Healthcare Landscape The Past Employers, payers Risk Reimbursement Service/volume-based 2000201020152020 Delivery Hospital-based, expert/specialist driven Community/retail-based, team driven Information Siloed, static, paper-based Treatment One-size-fits-all, volume-based 2005 Personalized, value-based Networked, dynamic, digitally-based Performance/value-based Providers, patients The Future Physicians are in the unique position to help shape the industry’s future. Healthcare transformation has afforded physicians unprecedented opportunities to shop their medical degrees to firms tasked with solving today’s issues. Where is the industry going? 8 Copyright © 2014 FTI Consulting, Inc.

9. Healthcare Reform ISSUES High cost to families ■Average insurance $14,000/ family and has doubled in last 9 years ■Aging population with more health problems High Cost To Federal Government ■Fastest growing segment of federal budget Holes in coverage People who need insurance most often turned down by preexisting conditions, lifetime limits, small business costs 1 in 7 had no insurance or under insured Health care organizations should take offensive and defensive strategic responses to these drivers: 9 Copyright © 2014 FTI Consulting, Inc.

10. Healthcare Reform ISSUES SOLUTIONS Insurance Reforms (no lifetime limits, limit preexisting conditions) Adjustments to Government programs (Medicaid expansion, Medicare Drug program) Health Insurance marketplace / exchanges (more competition) Insurance Mandate - required insurance coverage (32 million new insured people) Health care organizations should take offensive and defensive strategic responses to these drivers: 10 Copyright © 2014 FTI Consulting, Inc.

11. Healthcare Reform ISSUES SOLUTIONS IMPACT $200 Billion savings over 10 years (2% of Budget and 3% of overall Healthcare spending) DON’T IMPACT DEFICIT. Must be paid from savings from Healthcare Providers, Medicare Insurers with less reimbursement and new taxes on healthcare companies and individuals $124 Billion in potential additional savings over 10 years Source: http://obamacarefacts.com/costof-obamacare.php In 2012 U.S. health care spending increased 3.7 percent to reach $2.8 trillion, or $8,915 per person Health care organizations should take offensive and defensive strategic responses to these drivers: 11 Copyright © 2014 FTI Consulting, Inc.

12. Healthcare Reform Health care organizations need to take offensive and defensive strategic responses to these drivers. Quality reporting Pay for performance Regulatory influence Transparency/data sharing Quality reporting Pay for performance Regulatory influence Transparency/data sharing New Sustainable Business Model Federally mandated programs that focus on quality and patient safety 2013: Administrative simplification 2014: Exchanges open to individuals and small employers 2011: Minimum medical loss ratio and rebates 2017: Exchanges open for large employers 2012: Medicare Advantage STAR Quality-based payments Fall 2011: CMS ACO application period 2013: Episode-based payment pilots begin 2012: CMS ACOs begin Value-based incentives and avoidable readmission penalties 2015: HITECH penalties begin Healthcare Plans Healthcare Providers 12 Copyright © 2014 FTI Consulting, Inc.

13. The Healthcare Journey Are we on diverging or converging paths? 13 Copyright © 2014 FTI Consulting, Inc.

14. Innovate 14 Copyright © 2014 FTI Consulting, Inc.

15. Heath System Transformation Acute Care System 1.0 --- Episodic Non-Integrated Care Coordinated Seamless Healthcare System 2.0 --- Outcome Accountable Care Community Integrated Healthcare System 3.0 --- Community Integrated Healthcare  Episodic health care  Lack integrated care networks  Lack quality and cost performance transparency  Poorly coordinate chronic care management  Episodic health care  Lack integrated care networks  Lack quality and cost performance transparency  Poorly coordinate chronic care management  Patient/person centered  Transparent cost and quality performance  Accountable provider networks designed around the patient  Shared financial risk  HIT integrated  Focus on care management and preventive care  Patient/person centered  Transparent cost and quality performance  Accountable provider networks designed around the patient  Shared financial risk  HIT integrated  Focus on care management and preventive care  Healthy population centered  Population health focused strategies  Integrated networks linked to community resources capable of addressing psycho social/ economic needs  Population-based reimbursement  Learning organization capable of rapid deployment of best practices  Community health integrated  E-health and telehealth capable  Healthy population centered  Population health focused strategies  Integrated networks linked to community resources capable of addressing psycho social/ economic needs  Population-based reimbursement  Learning organization capable of rapid deployment of best practices  Community health integrated  E-health and telehealth capable Overview Source: Neal Halfon, UCLA Center for Healthier Children, Families & Communities 15 Copyright © 2014 FTI Consulting, Inc.

16. New Business Models Accountable Care Organization Clinically Integrated Network Other 16 Copyright © 2014 FTI Consulting, Inc.

17. Level 1 - In Patient Acute Care Level 2 - Post Acute Care Level 3 - Chronic Condition Management Level 4 - Population Health Management Quality Over Quantity (Value over Volume) Assuming increased financial and clinical accountability Quality Over Quantity (Value over Volume) Assuming increased financial and clinical accountability New Business Models Accountable Care Organization (ACO) Value-Based Care (VBC) Care Coordination The ACO is the centerpiece of a Clinically-Integrated Network Model 17 Copyright © 2014 FTI Consulting, Inc.

18. 18 Copyright © 2014 FTI Consulting, Inc.

19. Volume (expanding exponentially)  social media, household appliances, automobiles, stop lights  blood pressure cuffs, smart scales, diabetes monitor, exercise equipment Velocity (rate at which volume is being generated)  From the beginning of time to 2003, we produced 5 exabytes (1000 6 ) of data.  From 2003 to 2012 we produced 2.7 zettabytes (1000 7 ), or 500x more data.  From 2012 to 2015 we will produce three times more data than between 2003 and 2012. Variety (types of data being produced)  documents, data (stock ticker), photos, audio, video, 3D models, location data, unstructured data Big Data, Big Impact Traditional data management no longer works. 19 Copyright © 2014 FTI Consulting, Inc.

20. The volume and quantity of data needed to analyze population health in hospitals and health systems has not existed historically in healthcare. Healthcare organizations have not invested in data and statistical analysis-based competencies Data quantity, prediction, data analysis population sets, statistics, insurance actuaries, etc. Data Driven, John Morrissey, Hospitals & Health Networks, 2013 *McKinsey Global institute Is Big Data Worth The Effort? $300 billion potential impact in exploiting Big Data in healthcare * 20 Copyright © 2014 FTI Consulting, Inc.

21. = FTC & CLIO Payer Requirement (2014) = At-Risk Population Management – Risk Stratification Requirement (Timing TBD) Improving Healthcare Through Enhanced Technology Patient Engagement/ Outreach Patient Portal Patient Education Mobile Applications Automated Reminders Response Tracking Patient Assessments Wellness Programs Patient Portal Patient Education Mobile Applications Automated Reminders Response Tracking Patient Assessments Wellness Programs Care Management/ Coordination Patient Registries Care Gap Reporting/ Alerts Visit Planner/Patient Summary Care Transitions & Coordination Clinical Decision Support EMR Integration Patient Registries Care Gap Reporting/ Alerts Visit Planner/Patient Summary Care Transitions & Coordination Clinical Decision Support EMR Integration Clinical Data Capture & Analytics Data Repository Claims Data Handling Terminology Mapping Physician Score- carding Existing Quality Measures External Benchmarking EMR Interfaces Clinical Data Handling Population Risk Stratification/ Management Predictive Risk Models Care Gap Reporting Customizable Filters Performance Reporting Provider Dashboards 21 Copyright © 2014 FTI Consulting, Inc.

22. Accelerate 22 Copyright © 2014 FTI Consulting, Inc.

23. ■Operational Performance – generally dealing with status quo acute hospital care and how to cut costs and improve revenue ■Clinical Quality – movement towards outpatient home care, clinical outcomes, patient preferences, and national campaigns, such as Choosing Wisely Comprehensive Quality Improvement Two Fundamental Optimization Pathways 23 Copyright © 2014 FTI Consulting, Inc.

24. Comprehensive Quality Improvement: Time, Complexity, & Difficulty Value, Risk & Reward V Operational Performance Optimization Revenue – Revenue Integrity Labor – Span of Control, HR Supplies – Standardization & Utilization Tech – EHR Optimization Clinical – LOS, Utilization, Variability Physicians - Enterprise & CARTS Revenue – AR & Billing Labor – Benchmarking Supplies – GPOs & Pricing Tech – HIS + Bolt-ons Clinical – Effectiveness Revenue – Patient Access, Denials Labor - Process Innovation Supplies – Purchased Services Tech – EHR Implementation Clinical – Value-Based Purchasing (e.g., Readmissions) Revenue – Call Center, Hospital & Physician Integration Labor – Shared Services Supplies – Strategic Relationships Tech – Business Intelligence Clinical – Integration/ Risk Contracting/ Population Health, Reinventing Care Delivery Physicians – Network Development Scale - Merger/ Integration Culture – Learning Organization, Patient Empowerment 24 Copyright © 2014 FTI Consulting, Inc.

25. Clinical Quality Improvement: Three Core Metric Objectives Functional Status Morbidity Rate Mortality Rate 25 Copyright © 2014 FTI Consulting, Inc.

26. Clinical Quality Improvement: Impact Evaluation Metrics Quality  Care gap closure  Peer review  Care pathway compliance Outcomes/Health Status  Potentially preventable admissions (PPAs)  Readmissions  Other potentially preventable events Satisfaction/Quality of Life  Patient satisfaction  Provider satisfaction  MD/staff retention rates Process/Behavior Change  Health Risk Assessments completed  ED wait times  Smoking Cessation  BMI Reduction Efficiency/Risk  Acute Length of Stay by DRG/CPT, etc.  Effective coding for Population Health Management 26 Copyright © 2014 FTI Consulting, Inc.

27. Our Nation: Nutrition, Physical Activity, and Obesity 27 Copyright © 2014 FTI Consulting, Inc.

28. Progress in Nutrition, Physical Activity, and Obesity Copyright © 2013 FTI Consulting, Inc. 28 Copyright © 2014 FTI Consulting, Inc.

29. Progress in Nutrition, Physical Activity, and Obesity From 2008-2011, obesity among low-income preschoolers declined in 19 of 43 states and territories studied. Copyright © 2013 FTI Consulting, Inc. 29 Copyright © 2014 FTI Consulting, Inc.

30. Our Nation: Tobacco Use 30 Copyright © 2014 FTI Consulting, Inc.

31. Tobacco Use 31 Copyright © 2014 FTI Consulting, Inc.

32. Tobacco Use 32 Copyright © 2014 FTI Consulting, Inc.

33. Collaborate 33 Copyright © 2014 FTI Consulting, Inc.

34. The goal of population health management is to keep a patient population as healthy as possible, minimizing the need for expensive interventions.  Proactive preventive and chronic care to all of a patients during and between encounters  Manage high-risk patients to prevent them from becoming unhealthier and developing complications  Use of evidence-based protocols to diagnose and treat in a consistent, cost-effective manner Population Health Accountable Care Patient Registries Care Teams Disease Management Patient- Centered Medical Home Coordinated Care Population Health – The First Line of Defense 34 Copyright © 2014 FTI Consulting, Inc.

35. Population Health: Transitioning to Value is a Huge Change 35 Copyright © 2014 FTI Consulting, Inc. Current View 30 Patients per Day 14 have Chronic Conditions Unknown Health Risks Office Visits too short for coaching New Population View 2500 Patient Population 900 have Chronic Conditions 1100-1250 have Moderate/High Health Risk Care Teams leveraged by HIT Volume-Based/Episodic Care Value-Based/Continuous Care

36. 36 Copyright © 2014 FTI Consulting, Inc. Population Health: A Model

37. Ref.: Truman Medical Centers Population Health Dynamics: 37 Copyright © 2014 FTI Consulting, Inc.

38. Population Health Interactive Stakeholders: 38 Copyright © 2014 FTI Consulting, Inc. Policy Makers/ Advocates Patients/ Community Politicians Clinical Providers Pharma/ Medical Devices/ Vendors Patient/ Community Advocates Public Health Agencies Educational Systems Purchasers Payers Health Systems

39. Public Health and Healthcare Opportunities to Work Together on Population Health Source: Georgia Department of Public Health Linking the Medical Home, Public Health Services and the Hospitals Quality Improvement Community Engagement Shared Health Assessment and Health Improvement Planning Care Extension and Case Management Designing Billable Community- Clinical Interventions 1 2 3 4 56 39 Copyright © 2014 FTI Consulting, Inc.

40. Doing Care Differently: Journey to a Healthier Kentucky A Final Thought 40 Copyright © 2014 FTI Consulting, Inc.

41. Prepared by: Phillip L. Polakoff, MD, M.Env.Sc., MPH Senior Managing Director Chief Medical Executive Health Solutions FTI Consulting Phil.Polakoff@FTIConsulting.com 510-508-9216 41 Copyright © 2014 FTI Consulting, Inc.