Restructuring The Care Delivery System: Will Limited Growth In - - PDF document
Restructuring The Care Delivery System: Will Limited Growth In Revenues Force A Change? Stuart H. Altman Chaikin Professor of Health Policy Heller School for Social Policy and Management Brandeis University Question Confronting Healthcare Executives
1
Chaikin Professor of Health Policy Heller School for Social Policy and Management Brandeis University
Question Confronting Healthcare Executives‐‐‐”Should We Upend Our Existing Delivery System Model To Lower Costs or Continue Business As Usual”?
Will Limits On Future Resources Force The System To Change
2
Altman and His Cronies Have Been Talking About The Coming of The Bogey Man For Years
3
Average Annual Percent Change in National Health Expenditures, 1960‐2012
13.1% 11.0% 8.4% 5.5% 5.8% 6.4% 7.0% 8.5% 9.5% 8.4% 7.1%6.8% 6.6% 6.2% 4.7% 3.8% 3.9% 3.9% 3.7% 3.8%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18%
1970 1980 1990 93 97 98 99 2000 1 2 3 4 5 6 7 8 9 10 2011 2012 2013
Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2010; file nhe2010.zip).
4
A Slow Down In Economic Growth Or Structural Factors Within The Healthcare System
As a Result of An Expanding Economy and Aging Medicare Recipients
5
Growth In Yearly Healthcare Spending Actual (2012‐2014) and Projected (2015‐2019)
4.80% 6.20% Annual Growth in Spending 2012‐2014 2015‐2019
Even For Medicare Most of Growth The Result Of More Care for Older Patients
6
Growth in Health Care Spending By Payer:
Actual 2012‐2014, Projections 2015‐2019
4.8% 6.0%
4.6% 0.3% 2.7% 4.5% 3.8% 4.5% 0.5% 3.4% 7.0% 0.8% 3.1% 2.6%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%
Total Health Consumption Expenditures Private Health Insurance Medicare Medicaid Total Health Consumption Expenditures Private Health Insurance Medicare Medicaid
Average Annual % Increase
Source of Funds
Growth in Enrollment Growth in Spending per Enrollee Total Health Consumption Expenditure Growth
5.1% 3.7% 9.7% 5.3% 6.9% 7.1%
2012 ‐ 2014 2015 ‐ 2019
Source: Office of The Actuary, CMA , September 2014. 7
(Reimbursement Model) In The Future Cost of Care Likely To Be Driven More By Spending Limits (Payment Model)
8
In The Past‐‐‐Most Hospitals Able to Make‐Up Shortfalls From Lower Government Payments and Uncompensated Care By Higher Payments From Pvt. Patients
9
91.40% 94.70% 134.50% 60.00% 70.00% 80.00% 90.00% 100.00% 110.00% 120.00% 130.00% 140.00% 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Hospital Payment‐to‐Cost Ratios
Medicare Medicaid* Private Payer
Private Insurance Payments Used to Pay for Lower Government Payments
10
11
6% 57% 71% 10 20 30 40 50 60 70 80 Private Medicare Medicaid Percent Change in Enrollment
CMS, National Health Expenditure Projections, 2012 to 2022, January 2013.
Growth in Enrollment by Payer Source, 2006 - 2022
As a Result Government Payments Will Dominate The Healthcare System!
12
CMS, National Health Expenditure Projections, 2012 to 2022, January 2013.
Total Health Insurance Payments by Payer Source 2006 versus 2022 (Percent of Total)
Can Healthcare Providers Continue To Counted on Higher Private Insurance Payments To Make Up for Shortfalls In Government Payments?
13
85.00% 80.00% 162.50% 60.00% 80.00% 100.00% 120.00% 140.00% 160.00% 180.00%
Hospital Payment‐to‐Cost Ratios
Medicare Medicaid* Private Payer
Private Payments Needs To Grow Substantially To Maintain Hospital Margins
14
Growth in Health Care Spending By Payer:
Actual 2012‐2014, Projections 2015‐2019
4.8% 6.0%
4.6% 0.3% 2.7% 4.5% 3.8% 4.5% 0.5% 3.4% 7.0% 0.8% 3.1% 2.6%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%
Total Health Consumption Expenditures Private Health Insurance Medicare Medicaid Total Health Consumption Expenditures Private Health Insurance Medicare Medicaid
Average Annual % Increase
Source of Funds
Growth in Enrollment Growth in Spending per Enrollee Total Health Consumption Expenditure Growth
5.1% 3.7% 9.7% 5.3% 6.9% 7.1%
2012 ‐ 2014 2015 ‐ 2019
Source: Office of The Actuary, CMA , September 2014.Depends: Where You Live and Whether Non‐Medicaid Expansion States Change Course
15
Slower Medicare Spending Growth Could Lessen Need to Further Cut Medicare Payment Rates
16
17
18
Medicare Should Limit Its Growth In Spending for Physician Services to The Growth In The Countries Real GDP!
19
Sustainable Growth Rate (SGR)
20
Actual Spending Growing Faster Than SGR 2000‐2004
Types of Services
Since 2001, actual spending for physician services has exceeded target
Note: Estimates shown are preliminary Source: Office of the Actuary 2008.
21
Because of legal limits on how much physician fees could be cut in one year and past deficit between target and actual spending‐‐‐ Deficits Put OFF‐‐‐
So‐‐‐Physician fees were scheduled to be cut by 18.9% 2013
22
Expected Hospital Revenue Growth
– Depends Where Located
– Continued Growth In Demand For Services
– Less Growth in Demand, Lower Growth in Revenue
– All Bets Off If Serious Cut Back In ACA
23
Expected Hospital Revenue Growth
– Growth In Patient Demand But Limited Growth in Per Patient Rates – Significant Changes In Program Put Off
Physician Payments and Post-Acute Care
– Some Likelihood That SGR Will Be Revised But No Big Inc. in Phy. Payments
Expected Hospital Revenue Growth
– Non-Exchange
– Govt. Exchange
24
Prudent Dictates---Need To Increase Efforts To Develop More Efficient (Lower Cost) Delivery System
25