Market Insights Volume 4 Sample

Highlights in This Issue
Key Metrics
Inflation still flat
Hospital margins +2.8%
Item 3
Key Topics
Public Policy: healthcare reform views and actions
Patient Safety: New CMS program to improve safety
Supply Chain
Deep Dive
Rx Shortages are a major issue
Best practices at hospitals and pharmacies
Items 3

Key Metrics A SNAPSHOT OF THE ECONOMIC AND HEALTHCARE LANDSCAPE

Macroeconomic Snapshot The most recent recession was worse and the recovery is slower than previous recessions. But, the economic landscape is improving.

Economic Growth (GDP)
	+2.8% in Oct–Dec ‘10 – Up from 2.6% in Jul–Sep ‘10 – Six consecutive quarters of growth

Unemployment
	8.9% in Oct–Dec ‘10 – Lowest unemployment rate since April ‘09 – 192K jobs added in February ‘11

Healthcare Snapshot Healthcare spending continues to grow at a faster rate than inflation, but spending is growing at the slowest rate in decades. While hospital margins have held steady, executives remain focused on cost savings and reimbursement issues.

Total Healthcare Spending
	+4% (from ‘08 to ‘09) $2.5 trillion 17.6% of GDP $8,000 per person – Data from CMS report for 2009, published January ’11 – Lowest rate of increase in 50 years
Inflation Rate by Payment Source
	+7.75% (commercial insurance) +3.27% (Medicare) Costs paid from 12/09 to 12/10 – Inflation higher for commercial insurance than Medicare – Inflation rate down 2% vs. a year ago for commercial; down 3.5% for Medicare
Possible Conversation Starters How will healthcare reform impact your organization’s bottom line? What planning is underway related to healthcare reform? What do you see as the impact on pharmacy? What impact will the expansion of Medicaid have on your facility? What will the financial impact be? What is your organization doing to prepare for the expansion of Medicaid?
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Key Topics TOPIC 1: PUBLIC POLICY/HEALTHCARE REFORM
One year after the passage of healthcare reform, states and healthcare leaders are largely focused on implementation, while dealing with financial concerns about the costs of reform.
Health leaders support reform but are concerned about its financial implications Amid much controversy, most health leaders: Oppose repeal. Only 34% favor full repeal, though 71% want some elements repealed. Oppose payment changes and Medicaid expansion. The parts of Patient Protection and Affordable Care Act (PPACA) most strongly opposed are an independent payment advisory board and expansion of Medicaid. Are actively planning. Most health leaders don’t believe repeal will occur and 85% are actively planning to deal with PPACA provisions. Believe access will improve. 50% believe the country’s access to healthcare will improve. Many health leaders also believe PPACA will drive improvements in quality and efficiency. Have financial concerns. 58% believe PPACA will cause the financial strength of their organization to deteriorate.
States play a critical role in healthcare reform Often lost in the federal debate is the role states play in healthcare reform. States will play a large role in implementation of major provisions, including: Expanding Medicaid coverage Establishing state insurance exchanges Regulating private insurance Developing coordinated eligibility and enrollment criteria Some recent developments related to states: There are varying estimates of the financial impact on states. A 2/11 Kaiser Family Foundation report showed a large variance in the estimated financial impact for different states. Some states anticipate tens of billions in costs; others anticipate savings. (Variances are based on different methodologies and demographics.) Tight state budgets are forcing big cuts of state healthcare funding. Examples: California’s governor proposed cutting $1.7B from the state’s Medicaid program, partly by limiting doctor office visits to 10 a year and prescription drugs to six a month Pennsylvania has notified 42K low-income adults it will drop their state-subsidized health insurance Tight state budgets are forcing big cuts of state healthcare funding. Examples: California’s governor proposed cutting $1.7B from the state’s Medicaid program, partly by limiting doctor office visits to 10 a year and prescription drugs to six a month Pennsylvania has notified 42K low-income adults it will drop their state-subsidized health insurance The federal government is giving states more flexibility on implementing health reform. Examples: Four states (FL, NJ, OH and TN) have gotten waivers to implement aspects of health reform (The New York Times 2/17/11) President Obama has said he is willing to amend PPACA to allow states to opt out of certain provisions of healthcare reform, including the mandate that requires individuals to buy insurance Complying with “meaningful use” regulation is a major priority for health systems Priority. Senior health executives rate “meaningful use” as their No. 1 IT priority over the next two years. Timing. Registration for Medicare and Medicaid EHR incentive programs began January 1, 2011. In April 2011, providers
Possible Conversation Starters How will healthcare reform impact your organization’s bottom line? What planning is underway related to healthcare reform? What do you see as the impact on pharmacy? What impact will the expansion of Medicaid have on your facility? What will the financial impact be? What is your organization doing to prepare for the expansion of Medicaid?
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Key Topics
TOPIC 2: REIMBURSEMENT AND PAYMENT

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Deep Dive WHAT DOES PATIENT CARE MEAN?
As healthcare undergoes a profound transformation, providers are rethinking the basic notion of “What does patient care mean?” Through analyzing data and articles, and speaking with directors of acute and alternate site pharmacies, some key themes were identified on what patient care means to hospitals and alternate sites, and how this ultimately impacts the pharmacies that service them.
What Does Care Mean at Acute-Care Facilities? Among the major themes about patient care in industry publications and mentioned by customers are: Safety. One customer observed that since To Err Is Human in 1999, the focus of care has been about safety. This emphasis has permeated all aspects of operations at most facilities. A HealthLeaders survey about priorities among leaders of healthcare organizations found safety as the No. 2 priority, behind only cost reduction. The patient experience. 93% of healthcare leaders say “patient experience” is among their top 5 priorities. This is driven by a desire to improve outcomes and satisfaction, and because in the future reimbursement will be tied to patient experience. Customers described experiential elements like valet parking, special services for families and the food served in the hospital cafeteria. Related to patient experience are: HCAHPS scores. HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems) is the first national, standardized, publicly reported survey of patients’ perspectives of hospital care. Data collection. With 2% of Medicare payment at risk for failure to report, most hospitals have collected and submitted data. This began in 2009. Pay-for-performance. PPACA will turn public reporting into pay-for-performance as a portion of a hospital’s Medicare payment will be at risk, based on their HCAHPS results. This begins at 1% in fiscal 2013 and grows to 2% in fiscal 2017. Press Ganey estimates that on average, U.S. hospitals will have $500,000 to $850,000 at risk annually.
What does this mean for pharmacy? Pharmacists are affecting the care delivered and how patients perceive the delivery of hospital care. Pharmacists are playing a key role on more collaborative clinical teams and are increasingly participating in rounds. “The best healthcare facilities now work in teams and they involve pharmacists on the clinical team.” (Mark Donaldson, Director of Pharmacy Services, Kalispell Regional Medical Center, Kalispell, Montana) Pharmacists are expected to use evidence and adopt technologies, like CPOE and electronic health records, to improve safety and efficiency. Pharmacists can affect quality, which is being measured and will ultimately impact reimbursement. Pharmacy can help in the transition and handoff between inpatient and outpatient. As a knowledgeable, trusted resource, pharmacists can affect the overall patient experience and patient satisfaction through education and medical management systems.
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