American College of Cardiology
Weaning Ourselves from High Cost
Health Care and Paying for High
Value Health Care
February 2, 2009
Douglas L. Wood, M.D., FACC, FACP
Chair, Division of Health Care Policy & Research
Mayo Clinic
1
Health Care Cost Growth
Implications
• Health care spending is growing 2.5%
points more than income each year
• By 2020, half of increase in real income will
be consumed by growth in health spending
• This excess spending growth has a greater
impact on federal fiscal balance than aging of
the population
• Immediate challenge is the growing share of
federal and state budgets devoted to health
care
See Congressional Budget Office, The Long-Term Budget
Outlook (December 2005), pp. 6-7 and 31-32.
2
Medicare Spending/Decedent
(Last 2 years of life, 2001-2005)
Source: Dartmouth Atlas of Health Care, Appendix Table 1.
Dartmouth Prediction of Percent
Reduction in National Medicare Spending
if Salt Lake City or Mayo Rochester
Benchmarks were the National Standard*
Mayo
Spending Rochester Salt Lake City
Inpatient 21.6% 31.9%
MD visit 35.3% 35.5%
*For volume of care (patient days, visits/person) price held constant
Source: Dr. Jack Wennberg, Salt Lake City, March 16, 2006,
“Value in Health Care: Must Better Care Cost More?
Lessons from Salt Lake City and Mayo Rochester”
4
Creating Greater Value for our
Patients
Quality
(outcomes + safety + service)
Value =
Cost over time
What Is Mayo Doing?
• Mayo Health Policy Center is
articulating principles for reform
• Value-based payment and transparency
• Better coordination of care
• Mayo Clinic Priorities for Care Redesign
• Healthiest Work Force
• High Value Health Care Project
• Reduce employee/beneficiary health
care costs and improve outcomes
High Value Health Care
• Apply effective care (evidence-based,
guideline driven) in six chronic
conditions and understand cost
structure of care
• Coronary artery disease
• Heart failure
• Diabetes
• Depression
• Asthma
• Medical back conditions
High Value Health Care
• Innovate care delivery
• DIAMOND depression project
• Web-based delivery protocols
• Home-based telecare for chronic illness
• eHealth options for specialist care
• Benefit design improvements
• Reduce hospital use
High Value Health Care
• Other immediate goals
• Model payment policy implications for
future policy recommendations and
benefit design
• Improve competitive position in
marketplace, especially with health
reform in Minnesota
• Create new basis for payment
Change how we
pay providers?
10
Mayo Clinic Health Policy Forum IV
Pay for Value
Co-host:
Dartmouth College
June 18-20, 2007
48 participants
11
Mayo/Dartmouth Forum
Principles for Payment Reform
• Payment systems should be designed
to provide patients with no less than
the care they need and no more than
fully informed, cost-conscious patients
would want
• Pay providers based on value –
measurable outcomes, safety and
service compared to the cost over time
12
Quality
Outcomes, Safety, Service
Value =
Cost
Unit price x Use Rate
13
Measurement of Value
• Outcomes, not processes
• Clinical and patient reported
outcomes
• Not adherence to guidelines
• Not participation in one
reporting system or another
• Cost over time
• Not length of stay, even with
adjustments
Results Orientation
• Focus first on improving quality, not
cost (costs will follow quality)
• Payment policy needs to be results
oriented, not input oriented
• End result is health, not health care in
visits, procedures, services
The Potential Impact of Payment
Reform to Pay for Value
What if we used data available today
to construct a value index as a basis
of payment?
16
If...
Quality = Outcomes + Safety + Service
and...
Cost = Cost per patient
over time,
are data available
to create value index?
17
Outcomes =
Case mix adjusted
hospital mortality compared
to expected
Data source:
Medical Provider Analysis and Review (MEDPAR)
18
Service =
Net Promoter Score* =
Patient survey data regarding patient
willingness to recommend...
“Definitely would recommend”
minus
“Definitely and probably would
not recommend”
Data source:
National Research Corporation Syndicated Survey
*Harvard Business Review
19
Cost per patient over time =
Per capita Medicare expenditures
for patients with at least
1 of 12 chronic conditions during
the last 6 months of life
Data source:
Dartmouth Atlas of Healthcare, 2006
*CDC Fact Sheet, CDC website, August 2, 2006
20
Mortality score +
Potential Net promoter score
value =
score Cost over time
in $ 000’s
22
Medical Center Value Equation Value Index
134 + 81
Mayo Clinic =
20.8
= 10.3
134 + 72
Cleveland Clinic =
21.5
= 9.6
117 + 72
Mass Gen Hosp =
28.0
= 6.6
U.S. teaching 113 + 55
hospital avg
=
25.8
= 6.5
127 + 63
John Hopkins =
36.7
= 5.3
127 + 63
UCLA =
40.7
= 4.7
23
One approach for moving
toward P4V?
Adjust provider payment based on value score
Hospital Reimbursement
value score received
Significantly median +5.0%
Above median +2.5%
Median Normal
Below median –2.5%
Significantly median –5.0%
24
Pay for Value
• Outcomes data are available
• Even slight payment repercussions
would start driving medical centers
to improve those factors impacting
value – outcomes, service,
cost over time
• Could get started now
• Refine over time as better data
is available
25
What Next?
• Providers work to coordinate care and
create value
• Government works to achieve universal
insurance coverage and pay for value
27