1. Health Reform and Key Health Industries: Implications, Challenges, and OpportunitiesMay 28, 2010 Kip Piper, MA, FACHE Senior Counselor
2. Briefing Agenda Hospitals and Health Systems Opportunities Challenges Implications Health Insurers / Health Plans Opportunities Challenges Implications Physicians and Clinics Opportunities Challenges Implications Pharma and Biotech Industries Opportunities Challenges Implications Medical Technology Industry Opportunities Challenges Implications 2
14. Coverage expansion raises questions about need uncompensated care payments and other special Medicaid financing.
15. Public hospitals may lose patient volume as newly insured “trade-up” to newer, better facilities.
16. Lower payments from commercial and Medicaid plans likely in long range. Insurers far less likely to cross subsidize Medicare and Medicaid.5
17.
18. Rate pressure from health insurers, as the insurers face tougher competition, lower profits and increase market power via consolidation, enrollment.
19. About 42% of uninsured will remain uninsured. Not solution to costs of unauthorized immigrants.
20. Significant consolidation likely. Of hospitals, health systems, physician group practices. Hospitals buying or partnering with physician groups.
21. Significant pressure on increasing operating efficiency, reducing readmissions and infection rates.
22. Heavy interest in demos, new payment methods, and delivery system reforms. Major advantages to early adopters. 6
37. Requirement on Medical Loss Ratios – mandate limiting amount of premiums available for marketing, administration, profit. Minimum MLR of 85% or 80%.
39. Traditionally profitably individual and small group markets will shrink dramatically as Exchanges begin. Employer-sponsored market will also shrink. At least 10 million, likely far more due to “crowd out.”
44. Significant pressure on profit margins due to combination of factors: floor on medical spending, Medicare Advantage cuts, loss of profitable segments.
45. With pressure on profit margins and need to grow revenue, insurers will consolidate and look for ways to grow in untapped markets (dual eligibles).
46. Federal and state government continue to grow as the dominate customer – more need to understand, navigate, influence, comply with government. 10
55. Cost of another extension of current rates will cost about $98 billion or more. Permanent fix to Medicare doc rate problem will cost minimum of $275 billion.
62. Low rates. Medicare rate problem continue for years. Payment rates unlikely to keep up with costs. Increases for primary care may come from cuts to specialty rates.
63. Physician practices will see increased competition from health systems, retail health clinics, federally subsidized community health centers.
64. Small practices will become increasingly difficult to operate, financially unviable. Pressure to consolidate and partner.
85. Higher proportion of business from public programs – with all the associated implications.
86. Significant pressure from comparative effectiveness research and value-based benefit designs. Must incorporate into clinical trial design, market strategy.
87. Biosimilars will have impact but will roll out over several years. Payors will be eager to use biosimilars.
88. Imperative to leverage, adapt to new policy environment – payment reforms, delivery reforms.
93. Emphasis on prevention and chronic care management likely to increase demand for screening, testing.
94. PPACA reflects strong federal interest in technologies, e.g., to support seniors and the disabled in their homes, reduce readmissions, support medical homes.
95. Opportunities to leverage an array of new initiatives to demonstrate the value of technologies – Medicare and Medicaid demos, Accountable Care Organizations.
96. Major expansion of federal funding for Medicaid home-based care for seniors and disabled – need for home monitoring, etc. $20+ billion.
97. Increase use of HIT will likely drive further investments in medical technologies, need for clinical support systems, and technology at point of care. 20
98.
99. Likely consolidation of hospitals / health systems and health insurers will change market dynamics.
100. Comparative effectiveness research. Increased number of technology assessments. Mix of opportunities and risks depending on evidence and offerings.
101. New payment methods will dramatically change roles, incentives for physicians and hospitals.
102. Larger portion of market covered by public programs with tight budgets and a penchant for regulation.21
103.
104. Pressure on margins from mix of new federal tax, higher public payor mix, and consolidation of health systems and health insurers.
106. Imperative to leverage, adapt to new policy environment – payment reforms, delivery reforms, Medicare and Medicaid demos, interest in episodes of care and reducing readmissions, increasing hospital operating efficiency.22