1. Making Leaps in Health Care Suzanne Delbanco, Ph.D., CEO The Leapfrog Group sdelbanco@leapfroggroup.org www.leapfroggroup.org

2. The Purchaser’s Perspective

3. Employer-Based Health Care System in Trouble Rapid escalation in cost (9-20+%/yr) Companies unable to absorb growing medical cost through product price increases Individual companies have limited purchasing power to effect change in system

4. Gridlock in the Health Care System Health Plans Not Letting Provider Value Show Through Providers Not Seeing Case for Reengineering Purchasers Not Buying Right, Toxic Payment System Consumers Not In the Quality Game Everyone Responsible, No One Accountable New Thinking is Needed to “Leapfrog” the Gridlock

5. The Impact of Bad Health Care Purchasing

6. Failures in the Quality and Safety of Care Patients receive recommended health care only 55% of the time 1 30% of all direct health care costs are due to poor care –Misuse, under-use, overuse, and waste 2 –Poor quality care costs between $1,900 and $2,250 per covered employee year 2 Poor quality means lives lost and mistakes made –Up to 98,000 deaths/year due to medical mistakes 3 1 McGlynn et al. 2003 2 Midwest Business Group on Health/Juran Institute 2003 3 Institute of Medicine 1999

7. The Leapfrog Movement and other Remedies

8. Inform & Educate Enrollees Compare Providers Rewarding & Creating Incentives for Quality & Efficiency Member Support & Activation The Leapfrog Operating System Improved Value Multipliers: Health plan products CMS & state purchasers Other distribution channels & partners

9. Pillars for Improving Quality Standard Measurements & Practices Transparency Incentives & Rewards

10. Sec. Leavitt’s Four Cornerstones to Promote Quality and Efficiency 1.Interoperable Health IT 2.Transparency of quality information based on standard measures 3.Transparency of price information 4.Incentives for high quality care Expands President’s Executive Order calling for federal purchasers (OPM, CMS, DoD) to use purchasing practices to promote these cornerstones

11. Standard Measurements & Practices We must ‘speak the same language’ when asking hospitals & doctors to report – national standards are essential

12. Four Safety ‘Leaps’ and Beyond Four Leaps 1.Computer physician order entry (CPOE) 2.Staffing ICUs with intensivists 3.Evidence-based hospital referral (EHR) for patients needing high-risk care to hospitals with the best track record and experience 4.Safety Score of 27 other National Quality Forum (NQF) -endorsed Safe Practices 4.Beyond “Never events” policy Leapfrog Hospital Insights

13. The Dashboard of Information Needed is Still Largely Blank HospitalsPhysicians Integrated Delivery Systems Treatment Options Clinical Quality (Safe, Timely, Effective) Efficiency Patient Experience Equity

14. Transparency Make reporting quality and cost measure results routine and use this information to make health care purchasing decisions

15. Leapfrog Hospital Quality and Safety Survey 2007 Survey launched on March 5 New additions include aortic valve and bariatric surgeries, never events, and a transparency indicator 2376 hospitals targeted in 33 regions 1,264 hospitals participating to date (7/31/07)

16. Leapfrog’s Regional Roll-Outs: Painting the USA Green 2001-2007 Regions drive survey data collection: 1. Recognize hospitals for participation and good performance 2. Use various financial incentives and rewards to drive further improvements Regional Roll-Outs! (Regions in Green)

17. 9 Survey results posted publicly

18. Leapfrog Hospital Insights Helps consumers make informed health care decisions and purchasers and plans create informed benefit designs, provider networks and reimbursement strategies Measures hospital performance on clinical quality and efficiency Five clinical areas: –Coronary artery bypass graft (CABG); –Percutaneous coronary intervention (PCI); –Acute myocardial infarction (AMI); –Community acquired pneumonia; and, –Deliveries/newborn care.

19. Good Progress, but… Leapfrog and other reporting efforts are limited in either or both scope and participation Rate limiting factors include quality of measures, burden of reporting, voluntary reporting may lead to self-selection, cost and quality are rarely connected

20. Incentives & Rewards Encourage better quality of care through incentives and rewards

21. Growing Efforts to Buy Right Public reporting and recognition Financial rewards to providers (200+ programs) –Reliance on process rather than outcomes measures –Payments are small – 2 to 6% Financial incentives for consumers CMS and states engaging and can be major force

22. Leapfrog Hospital Rewards Program TM Leapfrog Hospital Rewards Program TM (LHRP) is based on Leapfrog Hospital Insights measures Program Goal is to motivate hospital quality improvement through recognition and rewards Self-sustaining as rewards are paid out of savings from improvements

23. There Is Significant Variance in Hospital Performance

24. The Top Performing Hospitals Show What is Achievable Top 25% in Quality and Efficiency

25. Savings Analysis - Results # hospitals % of Total Hospitals Avg Payment % of Grand Mean # hospitals % of Total Hospitals Avg Payment % of Grand Mean # hospitals % of Total Hospitals Avg Payment % of Grand Mean Cohort 1 98.2%$13,63165%87.5%$24,68571%94.4%$4,85176% Cohort 2 5650.9%$18,69990%5551.9%$31,62691%11556.1%$5,80990% Cohort 3 1412.7%$23,372112%109.4%$39,145113%3115.1%$6,723105% Cohort 4 3128.2%$25,700123%3331.1%$41,025118%5024.4%$7,918123% 110100.0%$20,852100%106100.0%$34,737100%205100.0%$6,420100% # hospitals % of Total Hospitals Avg Payment % of Grand Mean # hospitals % of Total Hospitals Avg Payment % of Grand Mean Cohort 1 32.7%$11,05073%176.9%$3,07175% Cohort 2 7264.9%$12,43882%13755.7%$3,70890% Cohort 3 98.1%$17,641116%2811.4%$4,08299% Cohort 4 2724.3%$20,190133%6426.0%$5,048123% 111100.0%$15,170100%246100.0%$4,113100% 1 Cohort 1 "Top Performance" Hospitals are Top Quadrant in Efficiency and Effectiveness Grand Mean PCIDeliveries / Newborn CAPAMICABG AMI % of hospitals Average Payment % of Average Perf. Group 18.2%$13,63165% Perf. Group 250.9%$18,69990% Perf. Group 312.7%$23,372112% Perf. Group 428.2%$25,700123% Average100%$20,852100%

26. National Opportunity Lives saved total includes 7,810 lives saved from ICU staffing

27. What’s Next?

28. Gainsharing Module Reward sharing between a hospital and its physicians under a scenario that also benefits purchasers and payers Based on quality, not cost as in other programs Possibly layered on top of Leapfrog Hospital Rewards Program

29. Rate physicians on whether the hospitals to which they most often refer patients meet the relevant Leapfrog standards Goal of shifting market share to hospitals meeting standards to drive performance improvement among others Requires attention to benefit design and administration Physicians Referrals

30. Bridges To Excellence, Proprietary & Confidential Page 30 PROMETHEUS is a new payment model that, if successful, will…  Remove the current barriers to the realization of high levels of professionalism in medicine, restoring autonomy with full public accountability  Significantly improve the coordination of care in a fragmented delivery system, and the quality of care for patients  Reduce unwarranted variation and moderate medical cost inflation  Create true pricing information for all, and a way to measure output More information: www.prometheuspayment.orgwww.prometheuspayment.org

31. Bridges To Excellence, Proprietary & Confidential Page 31 It has a few important ingredients Pay right, right from the start – It starts with Evidence- informed Case Rates (ECRs) that are adjusted to reflect patient severity. High performers can make more than 100% of the Case Rate – doing well while doing right. Low performers will make less. Promote clinical integration and accountability across the board, and reward better quality – 10% to 20% of the payment is deposited in a performance contingency fund and tied to provider performance on process and outcomes of care, patient experience of care, and cost-efficiency. Providers are encouraged to be clinically integrated, even virtually, with 30% of their score dependent on the performance of downstream providers. Promote transparency – ECRs provide real and complete price transparency for consumers and providers, and the scorecard provides full transparency on quality.

32. Will Incentives and Rewards Work? Our current fixes are superficial They highlight the need to rebuild the payment system and how we organize care Costs are rising – aging population, new drugs and technology may outstrip efficiencies we can create The need to shave the trend in health care costs is desperate

33. Leaping Over the Gridlock Growing standardization in measurement, transparency and aligned incentives Health care system evolves so slowly, we can see the future now and might as well prepare