The Future of Health Care

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The Future of Health Care
Julie Puentes jpuentes_at_hasc.org [phone]
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CONTEXT

• HASC Who we are and what we do
• The current state of hospitals
• The future

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HASC Who We Are and What We Do

• 501 (c) (6) regional trade association
• 160 hospitals which operate 41,000 beds in of
  LA, Orange, Riverside, San Bernardino, Santa
  Barbara, and Ventura Counties
• 29 hospitals in OC
• Staff of 65 11 m operating budget
• Local advocacy and partnership with CHA on state
  and federal issues

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Hospitals as Economic Contributors

• Statewide
• 400,000 workers generate nearly 1.5 jobs for
  each hospital job
• 146 b in economic activity
• 59 b wages and salaries
• Usually the largest or near-largest employer in a
  community (esp. rural)

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Hospitals in this Economy

• 33 hospitals report more ER visits
• 73 now unable to pay out of pocket costs
• 30 fewer elective procedures
• 25 unable to access capital for seismic
• 41 halting construction, equipment purchases

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Hospitals in This Economy 2

• Employers dropping coverage
• Patients putting off primary care
• Admissions AND patient acuity rising
• Continuing pressure from commercial health plans
• Threats to payments from county governments
  facing their own issues

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Hospitals in This Economy 3

• Union issues
• Hospital-physician issues
• Government programs underpaying

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DISTRIBUTION OF COST BY PAYOR TYPE

• Hospitals are reimbursed from many different
  sources
• Large percentage of reimbursement comes from
  government programs, which do not even cover
  the cost of care
• Continued pressure on Medicare reimbursement
  due to federal deficit
• Continual state budget issues create severely
  under-funded Medi-Cal program

Source The Lewin Group Analysis of the American
Hospital Association Annual Survey data, 1980,
2003, and 2004, for community hospitals. (1)
Non-patient represents costs for cafeterias,
parking lots, gift shops and other non-patient
care operating services and are not attributed to
any one payer. (2) Uncompensated care
represents bad debt expense, at cost, and charity
care
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Hospital Payment to Cost Ratios by Payer
1.22
0.87
0.78
3 of cost is bad debt and charity care
Payment-to-Cost Ratio
Private
Medicare
Medicaid
0.45
County
35
34
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Percent of Cost
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Medicaid Disparity
Source Kaiser State Health Facts 05
Distribution of Medicaid Payments by Enrollee.
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CURRENT STATE PRESSURES ON ALL FRONTS

• PERSONNEL SHORTAGES
• Shortage of 17,000 physicians and more
  than 116,000 nurses by 2015
• Additional shortages in pharmacy, medical
  lab technicians, and other areas

Data for Los Angeles, Orange County, Ventura
County, and Inland Empire
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LONG-TERM THREATS
Facility Closure History Hospital Association of
Southern California For Los Angeles, Orange, San
Bernardino, Riverside, Ventura and Santa Barbara
Counties. Aug-07 Martin Luther King Jr. - Harbor
Hospital Los Angeles Jan-07 Centinela Freeman
Regional Med Apr-05 Brea Community Hospital
Orange Feb-05 Valley Plaza Doctors Hospital
Riverside Dec-04 Robert F Kennedy Medical Center
Los Angeles Dec-04 Northridge Hospital Medical
Center, Sherman Way Campus Los Angeles Aug-04
Elastar Community Hospital Los Angeles May-04
Century City Hospital Los Angeles May-04 Monrovia
Community Hospital Los Angeles May-04 Angels
Hospital San Bernardino Jan-04 Santa Teresita
Hospital Los Angeles Dec-03 Santa Paula Hospital
Ventura Nov-03 Anacapa Hospital Ventura Aug-03
Santa Ana Hospital Medical Center Orange Jul-03
Granada Hills Community Hospital Los
Angeles Jun-03 St. Francis Medical Center of
Santa Barbara Santa Barbara Jun-06 Santa Paula
Hospital Santa Barbara Mar-03 Pine Grove Hospital
Los Angeles Mar-03 Alta Bellwood General
Hospital/Orange County Feb-02 St. Luke Medical
Center Los Angeles Oct-00 Heritage Hospital -
Inland Empire San Bernardino Sep-00 Long Beach
Community Hospital Los Angeles Sep-00 Anaheim
Memorial West Campus (Martin Luther)
Orange Jun-00 Edgemont Hospital Los
Angeles Jan-00 Charter Hospital Palm Springs
Riverside Sep-99 Bay Harbor Hospital Los
Angeles Sep-99 Charter Hospital Mission Viejo
Orange Mar-99 Valley Community Hospital - Santa
Maria Santa Barbara Feb-99 Washington Hospital
Los Angeles Nov-98 Vencor Hospital - Burbank Los
Angeles Nov-98 Pacific Care Hospital Center
Orange Oct-98 Legacy Hospital--San Gabriel Los
Angeles Jul-98 Medical Center of North Hollywood
Los Angeles Jul-98 Capistrano-by-the-Sea
Orange Jun-98 Pacific Shores Hospital
Ventura Jun-98 Long Beach Doctors Hospital Los
Angeles May-98 South Bay Hospital Los
Angeles May-98 Friendly Hills Regional Medical
Center Orange Mar-98 Tustin Hospital
Orange Dec-97 Woodruff Community Hospital Los
Angeles Dec-97 Newhall Community Hospital Los
Angeles Sep-97 Pioneer Hospital Los
Angeles Aug-97 Thompson Memorial Hospital Los
Angeles Aug-97 SHC Specialty Hospital (was
Westlake) Los Angeles Dec-96 Westside Hospital
Los Angeles Dec-96 Westlake Community Hospital
Los Angeles Became SHC Specialty Hospital Nov-96
Charter Community Los Angeles Aug-96 Ingleside
Hospital Los Angeles Apr-96 Charter Behavioral -
Los Altos Los Angeles Apr-96 Charter Behavioral -
Thousand Oaks Ventura Apr-96 Charter Behavioral -
Yorba Linda Orange Mar-96 Desert Palms Comm.
Hospital Los Angeles Nov-95 CPC Santa Ana
Hospital Orange Nov-95 CPC Laguna Hills Hospital
Orange Nov-95 CPC Rancho Linda Hospital Orange
Jun-95 Charter Long Beach Los Angeles May-95
Bellwood Health Center Los Angeles Jan-95 West
Valley Hospital Los Angeles Sep-94 NuMed Regional
Medical Center Los Angeles Sep-94 Norwalk
Community Hospital Los Angeles Sep-94 Valley
Hospital Medical Center Los Angeles Sep-94
Palmdale Hospital Los Angeles Jun-94 Alamar
WomensCounseling and Renewal Program
Ventura Jun-94 Terrace Plaza Medical Center Los
Angeles May-94 Glenbrook Hospital Los
Angeles Mar-94 Naval Hospital, Long Beach Los
Angeles Aug-93 CPC Brea Canyon Hospital
Orange Aug-93 CPC Westwood Hospital Los
Angeles Jun-93 CIGNA Medical Center Los
Angeles May-93 LifePLUS Coldwater Cyn Hospital
Los Angeles Apr-93 Beverly Hills Medical Center
Los Angeles Mar-93 Woodview-Calabasas Hospital
Los Angeles Nov-92 Suncrest Hospital of South Bay
Los Angeles Nov-92 Humana Hospital Westminster
Orange Oct-92 Suncrest of Orange County
Orange May-92 Medical Center of La Mirada Los
Angeles Jan-92 Panorama Community Hospital Los
Angeles Sep-91 CPC Horizon Los AngelesAug-91
Valley Hospital Los AngelesJun-91 Christian
Hospital (Lakeside) RiversideJun-91 Charter
Hospital Fountain Valley OrangeMay-91 Dominquez
Medical Center Los AngelesMay-91 Linda Vista
Hospital Los AngelesNov-90 Meadowbrook Hospital
Los AngelesOct-90 Van Nuys Community Hospital Los
AngelesAug-90 Rancho Encino Medical Center Los
AngelesJun-90 Marina Hills Hospital VenturaJun-90
Pacific Shores Hospital Los Angeles
ReopenedMar-90 Midwood Community Los
AngelesNov-89 St. Jude Hospital, Yorba Linda
OrangeOct-89 West Hollywood Hospital Los
AngelesMar-89 Mountainview Lodge Los
AngelesMar-89 LifePLUS (Pasadena Community) Los
AngelesFeb-89 Channel Islands Ventura Reopened as
alzheimers facilityFeb-89 Canoga Park Hospital
Los Angeles PsychJan-89 Queen of Angels Medical
Center Los Angeles Merged w/Hollywood
Presbyterian1988 Care Unit Los Angeles Los
Angeles1988 Inglewood Womens Hospital Los Angeles
Converted to outpatient clinic1987 Buena Park
Community Hospital Orange Converted to
Psychiatric1987 Century Community Hospital Los
Angeles1987 Metropolitan Los Angeles1986
Fullerton Community Orange1986 Hospital del
Pueblo Los Angeles1986 Lakeview Medical Center
Los Angeles1986 Los Altos Hospital Los
Angeles1986 Simi Valley Hospital Ventura
Converted to CD1986 Valley Park Medical Center
Los Angeles Converted to psychiatric1985 Avalon
Memorial Hospital Los Angeles1985 City View
Hospital Los Angeles1985 Beverly Glen Medical
Center Los Angeles Converted to Plastic Surgery,
then CD1985 Doctors Hospital of Hawthorne Los
Angeles1985 Orange Grove Hospital Los Angeles1985
Park View Hospital Los Angeles1985 Sierra Madre
Hospital Los Angeles Converted to SNF1985 Valley
Hospital Los Angeles Converted to podiatry/Eye
Surgery1985 Counterpoint Center Los Angeles1984
La Vina Los Angeles1984 Valley Vista Hospital Los
Angeles1983 Woodruff Gables Hospital Los Angeles

• More ER Closures (70 ER closures and 80 hospital
  closures in last decade)
• Hospital closures
• Limited access to small number of specialists

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Its the e c o n o m y, stupid!
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Projected Federal Spending as a Percent of GDP
Source CBO, The The Budget and Economic
Outlook Fiscal Years 2008 to 2018, January
2008. Accessed online at http//cbo.gov/ftpdocs/89
xx/doc8917/01-23-2008_BudgetOutlook.pdf

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WHAT IMPACTS THE COST OF HEALTHCARE?
HEALTHCARE COSTS ARE IMPACTED BY SEVERAL FACTORS
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UNDERSTANDING HEALTHCARE COSTS WHO IS
RESPONSIBLE

• Premiums have far outpaced inflation and
  reimbursements to hospitals

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Spending Distribution by Category
Source CHCF
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Spending Distribution by Contributors
Source CHCF
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Spending Distribution by Payer
Source CHCF
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Drivers of Spending Growth
Source CHCF
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Annual Out-of-Pocket Spending
Source CHCF
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Affordability
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Obama Health Proposal Plan for a Healthy
America

• All Children Must Have Coverage Enforcement not
  Specified
• Voluntary Subsidized Coverage for Low-Income
  Not Specified
• New National Exchange as Alternative to Current
  Market

If You Are Medicaid/SCHIP Eligible
People with Employer Coverage
People Without Employer Coverage and Ineligible
for Medicaid

• National Exchange
• Private Plans
• Premium Subsidies
• Guaranteed Issue
• Rating Limits

Employer Provides Plan or Pays Tax 50 Tax
Credit for Small Low-Income Employers

• Current Market
• Premium Subsidies
• Guaranteed Issue
• Rating Limits

• New National Plan
• FEHBP Benefits
• Premium Subsidies

Medicaid Retained and Expanded

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The Public Plan Impact of Using Medicare
Provider Payment Rates on Premiums in the
National Plan

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Reduction in National Health Spending under Cost
Containment Provisions of the Obama Proposal
2010-2019 (billions)
ComparativeEffectiveness 39.9
Drug Negotiations 18.0
3.1
7.0
MedicareOverpayments 135.3
Drug Re-importation 42.6
23.7
7.5
23.3
19.5
Medical Home 132.9
HealthInformation Technology 111.2
7.6
8.4
DiseaseManagement 43.6
Pay-for-Performance 48.1
Total System Savings 571.6

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MegaTrends

• Population increases, acute hospital bed demand
  decreases
• Back to the future all health care is local
• Advancements in medical technology, pharmacology
  and medical treatment (designer medicine)
• Dying becomes a treatment option
• Workforce shortages become a change agent
  mega-licensed practitioner emerges

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Something to think about?
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Opportunities

• Emphasis on quality and service transparency and
  public accountability
• Corporate Practice of Medicine
• Economies of scale through consolidations
• Research and better patient outcomes
• Commercial health plan transparency
• Healthcare reform more covered

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Questions?
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