HBS Health Industry Alumni Conference
March 14, 2012
Health Care 2020
©2012 THE ADVISORY BOARD COMPANY
Emerging Innovations in the Health Care Payment and
Delivery Landscape

2
Looking to Put Health Care on a Budget
Three Manifestations of Health Care on a Budget
Federal Budget
Framework
Budgeting in the
Private Market
3
Growth
Rate
1
2
Health Care
Inflation
Individuals
on a Budget
©2012 THE ADVISORY BOARD COMPANY
Inflation
Time
Source: Health Care Advisory Board interviews and analysis.

3
Budgeting in the Private Market
Driving Innovation in the Commercial Market
Commercial Insurers Following Medicare’s Lead
Providence Health &
Services: $30 M, two-year
contract with public
employee benefits board
Blue Shield California:
Two ACOs in Northern
California
©2012 THE ADVISORY BOARD COMPANY
Anthem Blue Cross:
ACO pilot with Sharp
HealthCare medical groups
BCBS Minnesota:
Shared savings contract
with five providers
BCBS Illinois: Shared
savings contract with
Advocate Health Care
Humana: ACO pilot
with Norton Healthcare
UnitedHealth Care: ACO
with Tucson Medical Center
Maine Health
Management Coalition:
Multi-stakeholder group
supporting ACO pilots
BCBS Massachusetts’s
Alternative Quality
Contract: Annual global
budget, quality incentives
for participating providers
Aetna: ACO pilot
with Carilion Clinic
CIGNA: Medical home
contract with Piedmont
Physicians Group
Source: “Anthem Blue Cross, Sharp HealthCare Pilot San Diego-Area ACO,” available at: www.healthcarefinancenews.com; “Norton Healthcare, Humana Launch ACO Pilot,” “Aetna, Carilion Clinic
Building ACO in VA ,” available at www.healthleadersmedia.com; “An ACO Takes Root in San Francisco,” available at: www.chwhealth.org; “8 Aspects of UnitedHealthcare's Plans to Fund an ACO at
Tucson Medical Center,” available at: www.beckershospitalreview.com; “Advocate Health Care, Blue Cross and Blue Shield of Illinois Sign Agreement Focusing on Improving Quality, Bending the Health
Care Cost Curve,” available at: www.bcbsil.com; “Minnesota’s Largest Health Plan Signs ‘Total Cost Of Care’ Agreement With Park Nicollet Health Services,” available at: www.bcbs.com; “BCBS
Massachusetts Announces First Year Results of Alternative Quality Contract,” available at: www.bluecrossma.com; “CIGNA and Piedmont Physicians Group Launch Accountable Care Organization Pilot
Program,” available at: newsroom.cigna.com; Maine Health Management Coalition, available at: www.mehmc.org; Health Care Advisory Board interviews and analysis.

4
Looking Ahead to a Decade (or More) of Change
Entering an Era of “Accountable Care”
Betting on a Provider-Driven Solution Set
Hospitals
• Consolidation and integration
Payers
Patients
• Continuum-wide care
• Efficiency and standardization
• Public—price cuts and risk shifts
• Private—risk-based contracting
• All—value-based payment models
Doctors
Employers
©2012 THE ADVISORY BOARD COMPANY
Who’s “accountable”?
• Group aggregation and employment
• Increased cost-sharing with employees
• Enhanced primary care practice
• Embedding IT to drive to EBM1
• Heavier emphasis on health management
• Defined (or no) contribution
1) Evidence-based medicine

5
Argument in Brief
There Has Never Been a Better Time to Be an Innovator in Health Care
Information Liberation
+
©2012 THE ADVISORY BOARD COMPANY
New Incentives
=
Rocket Fuel for Innovation

6
Open Health Data
Engaging Citizens in Health Improvement at the Community-Level
Community
Health
Provider
Directories &
Quality
Govt Spending
HHS(Growing)
Catalog of
Liberated Data
©2012 THE ADVISORY BOARD COMPANY
Medical/Scientific
Knowledge
“Blue Button”
Consumer
Product
Information
Source: Asthmapolis, iTriage, Ozioma, Healthline.

7
“Deep Dive” – Data Liquidity for Personal Health
Blue Button,” DIRECT - Government Startups that Scale
©2012 THE ADVISORY BOARD COMPANY
“Blue Button” in Brief
President challenges VA to deliver
simple health download from PHR
on 08/10; delivered 10/10 and has
>400,000 users to date
“Direct” Secure Email Standard
An open collaboration to develop a simple
method for enabling secure Internet-based
health data transmission; specs posted in
90 days; first production transaction 1/11;
implementation by 65+ vendors
Source: www.va.gov/open; www.bluebuttondata.org.

8
New Incentives, Part I
“Meaningful Use”
Growing Evidence Linking Quality to Health IT Adoption
Office-Based Physicians an EHR
ePrescribing on the Surescripts Network
Cleveland Clinic Providers using EHRs vs. Paper Records
40.2%
51%
44%
20.7%
16%
0.8%
*Denominator
Dec-06
Mar-07
Jun-07
Sep-07
Dec-07
Mar-08
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
©2012 THE ADVISORY BOARD COMPANY
45.0%
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
Quality of Diabetes Care
Dramatic uptick in EHR adoption –
nearly doubling in one year and on
track to support “meaningful use” in the
coming years
7%
% Obtaining All % Obtaining 4 of 5
Recommended Outcome Standards
Care Processes
Care Processes: Measure Hemoglobin; Kidney
Mgmt; Pneumococcal Vaccine; Eye Exam
Outcomes: LDL<100 mg/dl; smoking; glycated
hemoglobin <8%; BP <140/80; BMI<30
Source: Office of the National Coordinator for Health IT; Source: Cebul, Randall D., et al.
New England Journal of Medicine, August 2011; Surescripts.

9
Cultivate Innovation Ecosystems
Substitutability the Key Design Principle to Modular Development
3rd Party Applications
Dr. Gunston Ho
©2012 THE ADVISORY BOARD COMPANY
Extending the EHR
Search Tool Extends Aids Care
Primary care clinic earns 180% of
Medicaid to improve care
coordination; adopts EHR with
support from extension center
EHR interoperates with modern
search tool to better manage
care population
Source: Dr. Gunston Ho, Apixio;

10
Information Asset
Looking Ahead to a Wired Health System
Emerging Data Systems Change Outlook of Competitive Asset
Today: Differentiate
on Data Access
Disruptive
Technologies
Future: Differentiate on
Data-Informed Care Plan
• Focus on data ownership
• Cloud Computing
• Data is prescriptive, predictive
• Health system has possession
of “the wires,” proprietary data
• National Network
• Focus on EHR1 capability
• Health Information
Exchanges
• Compete in a world of
greater transparency
• Data analysis conducted in silos
“
©2012 THE ADVISORY BOARD COMPANY
Physicians on the Fast Track
“Cloud-based technologies and PHRs1 are potential examples of disruptive technologies in health IT.
These types of technologies might allow the 80 percent of physicians who are non-digital to leapfrog
some of the existing limitations of EHR systems directly into more modern technologies.”
Report to the President
President’s Council of Advisors on Science and Technology
1) Electronic Health Record.
Source: Executive Office of the President, “Realizing the Full Potential of Health Information Technology to Improve
Healthcare for Americans: The Path Forward,” available at: http://www.whitehouse.gov/sites/default/files/microsites/
ostp/pcast-health-it-report.pdf, accessed April 26, 2011.; Health Care Advisory Board interviews and analysis.

11
New Incentives, Part II: Payment Reform
Pay for “Value” to Drive New Markets for Care Coordination Services
Patient Centered
Medical Homes
• Organized outpatient care,
coordination and team-based
approaches
Accountable Care
Organizations
• Shared savings; Redesigned care
processes for high quality, efficient
delivery
Innovations Needed:
• Data Mining/Analytics
• Care Integration Tools
• Timely Clinical Data,
Decision-Support
©2012 THE ADVISORY BOARD COMPANY
Bundled
Payments
• Pilot program for episodes of care;
incentivizes reduced costs around
eight conditions
• Technology to Extend
Physician Reach
• Consumer Engagement
Tools/Platforms/Apps
Readmission
Reduction Programs
• Motivates hospitals to engage with
care coordinators and better
organize delivery systems

12
Shifting Risk and Accountability to Providers
Providing an Incentive to Remake the Delivery System
Capitation/Shared-Savings Models
Episodic Bundling
Degree of
Shared Risk
Hospital-Physician Bundling
©2012 THE ADVISORY BOARD COMPANY
Pay-for-Performance
Care Continuum
Source: Health Care Advisory Board interviews and analysis.

13
Chronic Disease Growth Outpacing Population Growth
Projected Increase in Chronic Disease Cases
2003-2023
62.0%
53.0%
39.0%
©2012 THE ADVISORY BOARD COMPANY
29.0%
41.0%
54.0%
19%: Projected
population
growth, 20032023
31.0%
Source: Milken Institute, available at: http://www.milkeninstitute.org/
pdf/chronic_disease_report.pdf, accessed April 27, 2011; Health Care
Advisory Board interviews and analysis.

14
Enabling Constant Monitoring of Health Status
Reminders Help Patient Stay on Track and Reinforce Care Plan
Activation On the Go
45
WellDoc Alert
“Your most recent blood
test shows that you have
low blood sugar. It’s time
to treat this before you eat
your meal or take your
meal time medication.”
Advice Triaged Across
Multiple Sources
• Real-time biometric
alerts via text message
• Longitudinal alerts and
reminders via web portal
• Secure provider
communication via e-mail
©2012 THE ADVISORY BOARD COMPANY
Technology in Brief: WellDoc, Inc.
• Health care technology company based in Baltimore, Maryland
• Initial clinical trials showed successful reduction of HbA1c levels by 2.03 percent
• Mobile health coach device can be used with variety of patients; with or without
physician participation
• Two-year, 225-patient effectiveness study completed January 2010; participants
included University of Maryland, Care First Blue Cross Blue Shield, Sprint, LifeScan
Source: WellDoc Inc., available at: http://www.welldocinc.com,
accessed: May 4, 2011; Health Care Advisory Board Interviews and analysis.

15
Putting it Altogether
©2012 THE ADVISORY BOARD COMPANY
Telemedicine an “Embedded” Asset in Care Delivery
Patients can consult with a
CareClix physician from the
comfort of their home or office. No
equipment or special hardware
needed. Mobile apps are available
for mobile patient. Little or no wait
to consult with a physician.
Web-based EMR provides
easy access to patient
charts, labs, and
pharmacies.
Two-way fully
duplex webbased video
conferencing
system.
Remote desktop
login assistance
is available at
the physician’s
finger tip.

16
Crimson Supporting Total Value of Care
Managing Performance Across Three Dimensions
Measuring Total Value of Care
1
2
1
Care Sustainability
Care Outcomes
Ensuring Financial and Operational Health
to Support Reinvestment and Growth
Improving Quality, Reliability,
and Experience of Care Provided
Key Metrics:
Key Metrics:
• Contribution margin
• Same-site 30-day readmissions
• Adjusted length of stay
• Hospital-acquired conditions
• Cost per case
• Complication of care rates
• Surgical revenue, percentage
of operating revenue
• Severity-adjusted mortality
3
2
©2012 THE ADVISORY BOARD COMPANY
Value Potential
3
Total Value of Care
Care Management
Managing Population Health and Preventing Chronic Disease
Key Metrics:
• At-risk population measures (e.g. diabetes, heart failure, hypertension, COPE, etc)
• Ambulatory-sensitive measures
• Preventive care measures and screening

HBS Health Industry Alumni Conference
March 14, 2012
Health Care 2020
©2012 THE ADVISORY BOARD COMPANY
Emerging Innovations in the Health Care Payment and
Delivery Landscape