Global Read - SEPAC, INC.

Report
Supply Chain: The
Horizon of Health Care
The Affordable Care Act
Health Care GDP
Affordable Care Act
• Coverage Expansion
• Market Reforms
• Delivery System Reform
• Timeline
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2010 – legislation passed / prevention services start; coverage
up to 25 years old
2011 – Medicare preventive services are free / Rx expansion
2012 – Advent of ACO structures; physician payments
reduced for non-reporting
2013- Health Insurance Marketplace opens 10/2013.
readmission penalties assessed
2014 – Medicaid expansion/ pre-existing condition ban, annual
limit bans and clinical trial coverage, tax credits and penalties
2015- Physician value reimbursement;
2017 – VBP increase to 2% withholding
COVERAGE EXPANSION
• 48.4M Americans Uninsured – CMS
• 2014 Individual “minimum essential” coverage is
mandated
• Penalties will be applied (supported by the Supreme
Court)
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$95 or 1% 2014
$325 or 2% 2015
$695 or 2.5% 2015 (max $2,085 w/ future cost of living
adjustment)
• 2014 State Exchanges established
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19 state operated; 25 federal; 7 partnerships
• 2017 Expansion of Exchanges
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http://www.census.gov/popclock/
http://capsules.kaiserhealthnews.org/wp-content/uploads/2013/03/social-marketing-research-forthe-health-insurance-marketplace.pdf
Exchanges: Where?
www.pewstates.org
http://kff.org/statedata/
MARKET REFORMS
• Coverage for individuals under the age of 26 – over 3
million Americans received new coverage FY 2011
• 2014 – Annual dollar limits are banned.
• Employer penalties $2k per employee (50+)
• Patient Bill of Rights covering pre-existing conditions
• Preventative benefits; immunizations, screening
• ACA ensures American’s have access to “Essential
Health Benefits” defined by CMS as:
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Ambulatory patient services
Emergency services
Hospitalization
Maternity and newborn care
Mental health and substance use disorder services, including behavioral health
treatment
Prescription drugs
Rehabilitative and habilitative services and devices
Laboratory services
Preventive and wellness services and chronic disease management
0. Pediatric services, including oral and vision care
DELIVERY SYSTEM
REFORMS
•ACO – Accountable Care Organizations
•Currently service 20M Americans (315M)
•Quality Measures: 33 measures; 4 areas
•Patient / Caregiver Experience
•Care Coordination
•Preventative Health
•At Risk Population
•Health Homes – 7 states
•Value Based Purchasing & Penalties
•Readmissions: Heart Attack, Heart Failure &
Pneumonia (2,217 facilities ; $280M)
•2015 Hospital Acquired Infections &
Conditions (Medicare)
http://www.cms.gov/medicare/medicare-fee-for-servicepayment/sharedsavingsprogram/downloads/aco_qualitymeasures.pdf
http://www.kaiserhealthnews.org/Stories/2012/October/03/medicare-revises-hospitals-
Supply Chain & ACA
Organizations are on a tight gross profit and
looking toward cost containment as a
source to off set revenue reduction.
1. 16% of total US GDP is health care
related.
2. NJ hospitals averaged 3% in GP (2012)
– smallest margin in 3 years.
3. Pensions and investments continue to
errode margins.
4. Supply Chain has been valued in
organizations between 35 and 50
percent of operational spend.
Mergers and Acquisitions:
Providers & Suppliers
Providers: 9% up in
volume; down 31.5% value
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PMG & Home Health
increased significantly in
value – ACO related
procurement.
Hospitals declined in
value but remain flat in
mergers
Suppliers: 2% up in volume’
down 42% in value.
•Decrease in Device and RX
volume and value
•Increase in Biotech &
eHealth volume but decrease
in value
•Regulation & taxation has
hurt the sector now
rebounding through merger
and acquisitions
•Tech and Devices are
looking up in 2013 with high
FDA approvals in the last
year.
Physician Relationship Changes
Largest contracting segment in health care.
EHR difficulties and small practices
ACO model strengthened value of practices
Concerns with Stark Law – driving Employment
Employment Law concerns
Outpatient & Wellness
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ACO models & Outpatient Services
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Largest growing supplier segment between 1999 and 2007
Supply Chain Non-Acute / IDN relationships
Standardization
Outpatient Service Model Changes: Pharmacy Access, DME
Wellness
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Immunization Mandates – grants, bulk buys, contracted
services
Hypertension & Diabetes
- Dietary Contracts / Nutritionals
Co-Branding / Congruent Services
Insurance Company Incentives
Real Estate & Retail
Mobile Wellness / Fairs – Marketing
Portfolio Diversification &
Retail
• Diverse Revenue Centers
– Training / Education
– Support Service Model
– Real Estate / Leasing
– Device and Innovation R & D:Spin off companies
• International Outreach
– Consulting
– Medical Tourism
• Retail
– Product recognition changes
– Hospital based marketing / product selection
– Diversified Services: DME, Orthotics, Home
Infusion Medications, Blood Banking
Service Line Strategies
• Oncology
– Screening ,internal and high risk programs
– Staging and intervention : drugs, devices, IC
– Technology assessment and reimbursement
• Cardiology & Orthopaedics
– Reduction in readmission / never events
– Lowest total cost procedures / highest quality
– Niche small vendors vs. large merged orgs
• Ambulatory Care
– Expansion and Growth
– Standardization
– Technology Shift :Lease vs. Buy
• Closed loop controls!!!!!!!!!!!!!!!
Quality & Patient Safety
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Everyone’s responsibility!!!!!
Evidence Based not Emotionally Based.
Supplies & Pharmaceuticals
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Equipment
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Terms and Conditions – new incentives (put your money
where your mouth is), BAA, rebate structures / pass through
of risk / reward
Staffing / Services
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Smart Pumps, reduction of blood loss, minimally invasive
technology, radiation exposure
Contracting
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HAI, VAPS, CLABSI, CAUTI, HH, Images
Off Label uses – Consolidation (Product & Market)
Outsourced alignment / mgmt
Strategic sourcing – GPO, local, collaborative
Information Technologies
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EMR technology / medication management, interface potential
with clinical diagnostics / interventions
Volume vs. Value
Not just for providers!
Old World
-Volume based discounts
-GPO – Regional Alliances
-“Federal Regulations”
-Selling points on quality / product efficacy
-Consolidate or remove services / reps.
-Consignment – Trunk Stock
-New World
-Open play market & provider choice
-Strategic agreements/ risk sharing
-Quality requirements
-Provider competition
-Increased TOTAL VALUE of offer – what
does the customer need?
-Limited inventory availabilities.

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