1. Health System Success in the Post-Election Environment South Texas Annual Joint Healthcare Conference January 25, 2013

2. Change

3. Our Changing Communities

4. Chronic conditions: o 80% of workers have one o 55% of workers have more than one o 50% of Medicare recipients have 3+ People over 65: o 44% of hospital care o 38% of EMS responses o 35% of prescription drugs o 26% of physician office visits o 90% of nursing home beds Demand is Increasing

5. Obesity: Adults o 34% obese o 34% overweight Children o 17% obese o 15% overweight Mental Health: Lifetime o Nearly half will develop mental illness o 27% will have substance abuse problems Each year o 25% have mental illness or substance abuse Demand is Increasing

6. Medicare comprises 43% of hospital revenue Medicaid represents 11% of hospital revenue Healthcare costs continue to grow at a faster rate than wages “ Up to one-third of the over $2 trillion that we now spend annually on healthcare is squandered on unnecessary hospitalizations; unneeded and often redundant tests; unproven treatments; overpriced, cutting-edge drugs; devices no better than the less expensive products they replaced; and end-of-life care that brings comfort nor cure.” – Dr. Jack Wennberg Healthcare Cost Escalation is Unsustainable

7. How Large is 1,000,000,000,000? A million million or a thousand billion A trillion seconds equal 31,688 years One trillion dollar bills placed end to end would circle the sun and back to Earth with many miles left over A trillion dollars would cover the cost of an additional 11 weeks of vacation for every American worker

8. Private payor pressure Uninsured and underinsured New payment methods Relocation of traditional hospital care to other settings Deteriorating government payments Labor Life saving technologies Redundant regulation and added administrative burden Information technology Emergency readiness Health Systems Face Numerous Challenges in Balancing Cost With Demand Decreasing RevenueIncreasing Cost

9. The Affordable Care Act (ACA) Coverage for 32 million Americans Major insurance reforms Payment and delivery system reforms Supreme Court decision Obama’s re-election

10. First Fiscal Cliff Health-Related Provisions of the American Taxpayer Relief Act of 2012 Suspends 26. 5% cut to Medicare physician payments Applies $11 billion documentation and coding reduction for hospital inpatient payments Extends Medicaid DSH cuts by one year to FY 2022 for $4.2 billion savings Extends outpatient therapy exceptions for one year Implements 50% multiple procedure payment reduction Extends statue of limitations to five years for Medicare overpayment recovery

11. More Fiscal Cliffs Delay in temporary cuts expire Debt limit is reached Continuing resolutions expire

12. www.aha.org

13. What to Expect: Payors 1.Providers and employees incentivized to participate in new care models 2.Institution of more comprehensive workplace wellness programs 3.Premium cost based on participation in improving health 4.Palliative care coverage 1.Payment methods reward care coordination, especially for chronic conditions 2.Data provided to hospitals and physicians 3.Billing, credentialing, and other administrative functions further automated 4.Lower premiums for patients who use preventive services or improve their health InsurersEmployers

14. What to Expect: Public 1.‘Owning’ your health healthy lifestyle vaccines compliance with caregiver instructions 2.Personal health records 3.More patient and family engagement in care wishes 4.Reduction in unjustified malpractice claims

15. What to Expect: Providers Accountable Transparent Value-based Volume-Based Value-Based

16. Hospital Merger and Acquisition Trends 2004-2011

17. Ensuring a Healthier Tomorrow Promote and Reward Accountability Accelerate payment and delivery system reforms Eliminate preventable infections and complications Engage individuals in their health and health care Better manage advanced illness Advance the use of health information technology and electronic health records Require transparency of quality and pricing information Use Limited Health Care Dollars Wisely Eliminate inefficient care Revamp care for vulnerable populations Promote population health Modernize federal health programs Simplify administrative and regulatory processes Reform the medical liability system

18. Core Competencies for Health System Leaders Design and implementation of patient-centered, integrated care Creation of accountable governance and leadership Strategic planning in an unstable environment Internal and external collaboration Financial stewardship and enterprise risk management Engagement of full employee potential Utilization of electronic data for performance improvement www.aha.org

19. Thank You!