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Maryjane WurthEVP & COO, American Hospital AssociationPresident & CEO, Health Forum

The Future of Healthcare in Light of the Current Legislative and Regulatory Landscape

Louisiana Hospital Association Winter Healthcare Leadership SymposiumJanuary 30, 2018

Federal Fiscal Year 2018

October 12017

September 302018

December 8 December 22

Basic funding the government

IMMIGRATION

• DACA• The wall

CHIP

• MedicaidDSH cuts

MEDICAREEXTENDERS

• Low volume• Medicare

dependent hospitals

DISASTERRELIEF

PRIVATEMARKET

STABILIZATION• CSRs• State grants for

reinsurance

January 19 February 8

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Medicare “Extenders”

• Medicare-Dependent Hospitals (S. 872/H.R. 1955)September 30

• Enhanced Low-volume Adjustment (S. 872/H.R. 1955) September 30

• Ambulance Add-On Payments(S. 967/H.R. 3236) December 31

• Therapy Caps (S. 253/H.R. 807)December 31

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Two Options

Alexander-Murray• Provides short-term funding for the CSR

payments • Expands access to lower-cost,

catastrophic health plans• Gives states additional flexibility to use

1332 waivers• Provides states with outreach and

education funding• Directs HHS to issue regulations

facilitating the sale of insurance products across state lines

Hatch-Brady• Funds CSR payments for two

years and eliminates temporarily certain ACA mandates

• Eliminates the ACA’s individual mandate from 2017-2021

• Eliminates the ACA’s employer mandate from 2015-2017

• Expands the use of HSAs

Market Stabilization - Two Options

“Tax Cuts and Jobs Act”

• Hospital Tax-Exempt Bonds• House provision to repeal not included

• Advance Refunding of Bonds• No advance refundings after 12-31-2017

• ACA Mandate• Repealed after 12-31-2018

• Medical Expense Deduction• Extended at 7.5% until 2019

• Interest Deduction for Corporate Debt• Capped at 30%, but based on House definition of

income until 2022

• Executive Compensation Tax• 21% employer excise tax for top five over $1

million

PUBLIC LAW 115-97

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Infrastructure

Expand the digital infrastructure for health care

Strengthen the capacity for emergency preparedness and response

Assist hospitals in “right-sizing” to meet the needs of their communities

Ensure adequate financing mechanisms are in place for hospitals and health systems

Infrastructure needs in health care are significant.

Investment is needed to:

The Affordable Care Act marketplace enrollment was almost as high for 2018 as it was for 2017. According to CMS, as of December 23, 2017:• 8.7 million individuals enrolled • In 2017, enrollment was 9.2 million

Public Views on the ACA

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340BTelling the 340B Story

Recent Regulatory Activity • Association Health Plans proposed rule• Medicaid 1115 waiver guidance on work

requirements • FCC Rural Healthcare Program proposed

rule to increase cap (broadband)• Bundled Payments for Care Improvement

(BPCI) Advanced Initiative

•BPCI- Advanced

Seema Verma Administrator of CMS

Alex Azar, nominee Secretary of HHS

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AHA Vision and CommitmentsOur vision: A society of healthy communities where allindividuals reach their highest potential for health

ACCESS: Access to affordable, equitable health, behavioral and social services

VALUE: The best care that adds value to lives

PARTNERS: Embrace diversity of individuals and serve as partners in their health

WELLBEING: Focus on wellbeing and partnership with community resources

COORDINATION: Seamless care propelled by teams, technology, innovation and data

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Economics of LA Health Care

In 2015, Louisiana hospitals:

• Employed 103,400 people

• Had a payroll of $5.5 billion

Healthcare, including hospitals, is the largest business sector:

• Over 294,900 employees

• Annual wages and salaries of almost $12.6 billion

More than 1,000 new jobs directly created because of Medicaid expansion.

Hospitals and the Louisiana Economy, 2016, Prepared for the Louisiana Hospital Association by James A. Richardson, Alumni Professor of Economics, Louisiana State University, May 2016Medicaid Expansion Annual Report 2016/17, Louisiana Department of Health

2016 Gross Revenue Shares by Payer

42.8%

18.3%

37.4%

1.5%

MedicarePrivate

Medicaid

Other

Source: American Hospital Association Annual Survey data, 2016, for community hospitals. This data does not include financial results for non hospital-based activities.

Includes Medicaid and Medicare Disproportionate Share payments.

Government payers account for 60 percent of revenues.

54.3 56.1 57.7 59.4 61.1 62.9 64.8 66.6 68.4 70.2 72.0

69.3 71.1 72.4 73.6 74.8 75.9 76.8 77.7 78.5 79.2 79.9

6.1 6.6 7.5 7.7 8.0 8.1 8.3 8.4 8.5 8.6 8.7

0

10

20

30

40

50

60

70

80

90

Mill

ion

s

Medicare Medicaid CHIP

Medicare, Medicaid, and CHIP Projected Enrollment Growth

Source: Centers for Medicare and Medicaid Services. National Health Expenditures Projections 2015-2025. November 2017.

* Enrollment numbers for 2016-2025 are projected.

Government payers account for 60 percent of revenues

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Per capita healthcare spending vs. consumer prices and average wages

2006200420022000199819961994199219901988

1.5

2.5

3.0

2.0

1.0

201220102008

3.5

Pric

e In

dex

Consumer Price IndexAverage WagesPer Capita Healthcare Spending

$20,099

$42,979

$8,684

$2,579 225.7

126.1 79%

114%

237%

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Special Bulletin Provides AHCA Update

Hospital price growth

Factors Impacting Affordability

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Key Stakeholders Impacting Affordability

Doing Our Part: Value and Innovation

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Value-based Strategies Identified by Members

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Initial Offerings

Innovation and Affordability Programs

The Innovation 90 Program AHA Innovation Academy

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Hospital and Health System Transformations

Hospitals with an ACO hassteadily increased

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7%8%

11%12%

13%

2012 2013 2014 2015 2016

Hospitals are taking on more risk

More hospital payment contracts with commercial

payors are tied to quality/safety performance

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3,1003,144

3,183 3,1983,231

2,750

3,000

3,250

3,500

12 13 14 15 16(1)

Number of Hospitals Part of a Health System, 2012 – 2016

Source: Analysis of American Hospital Association Annual Survey data, 2012-2016, for community hospitals.

Over 3,200 hospitals (67%) now operate as part of a health system.

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Announced Hospital Mergers and Acquisitions, 2012 – 2016

Source: Irving Levin Associates, Inc. (2017). The Health Care Services Acquisition Report, Third Edition. (1) In 2013, consolidation of several investor-owned systems resulted in a large number of hospitals

involved in acquisition activity.

10588 99 102 90

242

293

175

265 245

$0

$5

$10

$15

0

50

100

150

200

250

300

350

12 13 14 15 16

billi

ons

Number of Deals

(1)

Quality and Patient Safety• Quality and patient safety

must be top priority

• High reliability organizations− Zero tolerance for error

• Addressing disparities

• Looking over horizon− Under-utilization

− Explosion of measures

− Diagnostic error

− Measuring clinical teams vs. individual providers

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Hospital Engagement Network 2015-2016

Advancing Higher Reliability Organizations

Shared Decision‐MakingCommon Language for Leadership

BE WELLFostering Resilience and Well‐

Being

• Shaping national dialogue on resiliency and well‐being 

• Reducing regulatory burden• Professional satisfaction• Increasing sense of community

LEAD WELLDeveloping Leadership 

Capacity

• Curated leadership curriculum and faculty resources

• Accelerating team‐based care• Physician governance resources• Onboarding/role responsibility 

resources 

CARE WELLDelivering High‐Value Care and 

Managing Populations

• Fostering high reliability cultures• Ensuring appropriate use of 

resources• Shaping care & payment redesign• Improving ability to foster 

community health

Education, Technical Assistance, Podcasts, Knowledge Hub, Toolkits, Learning Collaboratives

Vision: A society of healthy communities where all individuals reach their highest potential for health. 

AHA Physician Alliance

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Public Health Emergency on Opioids

In 2016, the age-adjusted rate of drug overdose deaths in the United States was more than three times the rate in 1999.

Drug overdoses are now the leading cause of death among Americans younger than 50.

Since 1999, the amount of prescription opioids sold in the U.S. nearly quadrupled, yet there has not been an overall change in the amount of pain Americans report.

The majority of drug overdose deaths – more than 6 out of 10 – involve an opioid.

In 2016, Louisiana is one of 22 states plus the District of Columbia that had age-adjusted drug overdose death rates that were statistically higher than the national rate.

In 2016, East Baton Rouge Parish overdose deathsexceeded motor vehicle deaths and equaled homicidedeaths.

In 2013, Louisiana ranked first in opioid prescribing.

Hedegaard H, Warner M, Miniño AM. Drug overdose deaths in the United States, 1999–2016. NCHS Data Brief, no 294. Hyattsville, MD: National Center for Health Statistics. 2017.2018 Environmental Scan, American Hospital Association, October 2017Frequently Asked Questions about Opioid Prescribing, Louisiana Department of Health, Sept 2017

Chronic care management

Source: Robert Woods Johnson Foundation. Chronic care: making the case for ongoing care. February 2010.

The number of Americans with chronic conditions is rapidly rising

(number in millions)

118125

133141

149157

164171

Chronic care management

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Social Determinants Of Health

Nutrition:• Nearly 40% of

American

adults are obese.

• 24% have at least one

diet related medical

condition.“Top health industry issues of 2017: A year of uncertainty and opportunity,” PWC’ Health Research Institute, December 2016

ConsumerismNew economics of health care

• Consumer expectation− What are they going to pay?− What are they going to get?

• Care on demand…convenience− Same day appointments− Walk-on care− ED fast tracks− Home visits or house calls− Patient portals or telehealth

• Episodic to continuous engagement• Pricing transparency• Managing and/or embracing the

“disruptors”…patient loyalty• Subsidizing social goods

Consumerism

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Consumerism

Wednesday, February 15Naval Heritage Center

9:30 AM

New economics of health careManaging and/or embracing the “disruptors” New technology shaping

traditional provider roles: Precision medicine

Artificial intelligenceMore than 90 start-ups are working on artificial intelligence applications in health care.

New entrants into the health care delivery system: CVS

Amazon

Google

“…we have 10,000 new front doors to the health caresystem…”Aetna Chairman and CEO Mark Bertolini

Disruptive Innovation

2018 AHA Environmental Scan

According to health care executives, clinical leaders and clinicians, Health care sectors most in need of disruptive innovation:• Hospitals and health systems (65%)• Health care IT (47%)• Primary care (36%)

• Next-generation gene sequencing• 3-D printing of medical devices• Immunotherapy• Artificial Intelligence• Point-of-care diagnostics• Virtual reality• Leveraging social media to improve

patient experience• Biosensors and trackers• Convenient care• Telehealth

“New Marketplace Survey: The Sources of Health Care Innovation,” Insights Report, NEJM Catalyst, Feb. 16, 2017

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The Future

• Some of us will focus on population health

• Some of us will focus on important traditional services

• Some of us will focus on developing new care models as we move from fee-for-service to fee-for-value

• Many of us will do all of the above

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The Future

• All of us will be seeking strategic partners

• All of us must focus on protecting and perfecting the “core:” Attaining a more favorable cost position;

Achieving solid hospital-physician and other forms of clinical alignment;

Measuring, reporting and delivery on superb outcomes;

Developing innovative care models; and

Making care more convenient…“reducing friction”

Leadership in Uncertain Times

• Stay connected to your purpose– Be good community stewards– Quality, patient safety and high performance is job #1

• Be courageous and see what lies around the bend– Assess the harsh realities– Ask the right questions– Shift! Look for new solutions

• Count on your team– Governance, management

and clinicians

- Build new relationships• Celebrate and tell the story

Moving upstream

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