Healthcare Reform and What That Means for Academic Medical Centers
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1 Healthcare Reform and What That Means for Academic Medical Centers Speakers: James Cortez Managing Director Charles Schwab Santiago Muñoz Chief Strategy Officer UCLA Health System Barrie Strickland Chief Financial Officer UCSF Medical Center Moderator: Sandra Kim Executive Director University of California
2 Agenda I. University of California & UC Health II. Profile of Academic Medical Centers and Key Provisions of HRC Reform III. UCLA Health System & UCSF Medical Center IV. Q&A 2
3 I. UNIVERSITY OF CALIFORNIA & UC HEALTH
4 The University of California includes 10 Campuses and 5 Academic Medical Centers UC Berkeley UCSF UCSF Medical Center UC Santa Cruz UC Santa Barbara UC San Diego UC Davis UC Davis Medical Center UC Merced UCLA UCLA Medical Center UC Irvine UC Irvine Medical Center UC Riverside Established in 1868 Governed by a 26-member constitutionally autonomous Board of Regents Pre-eminent faculty who have won 60 Nobel Prizes, more than any other U.S. public university Approximately $52 billion of assets and $34 billion of liabilities in FY11-12 UC s pension funded ratio as of July 1, 2012 is 78.7% UC San Diego Medical Center 4
5 Owned and operated by The Regents, the UC Medical Centers have a significant presence throughout the state UC San Francisco Medical Center (722 beds) UCSF Medical Center at Parnassus (Moffitt/Long) UCSF Benioff Children s Hospital UCSF Medical Center at Mt. Zion Hospital UC Davis Medical Center (619 beds) UC Davis Medical Center Hospital Major referral centers with high case mix index levels Five comprehensive cancer centers & neonatal intensive care units, 50% of all transplants in the state, operate/ staff five Level I trauma centers Relationships with more than 100 affiliated health facilities Systemwide the UC faculty practice group is the second largest in the country UC IRVINE HEALTHCARE UC Irvine Medical Center (412 beds) UC Irvine Douglas Hospital UC Los Angeles Medical Center (806 beds) Ronald Reagan UCLA Medical Center Mattel Children s Hospital UCLA Santa Monica UCLA Medical Center UCLA Resnick Neuropsychiatric Hospital UC San Diego Medical Center (600 beds) UCSD Thornton Hospital UCSD Medical Center - Hillcrest Hospital 5
6 Being at the intersection of three distinct missions makes Academic Medical Centers unique UC again features the best hospitals in the West, according to U.S. News & World Report s annual survey for Ronald Reagan UCLA Medical Center ranked 5 th and UCSF Medical Center ranked 13 th nationally The largest health sciences training program in the nation 14,000 students and 5,000 physicians Educate approximately 60% of medical school graduates in California Train more than 40% of all interns and residents statewide Patient Care UC HEALTH Health Care Professional Training Clinical & Translational Research These core competencies reflect UC s overall teaching, research and public service missions 6
7 Strategic new UC Medical Center facilities are being placed into service UCLA Ronald Reagan Medical Center* (2008) UC Davis Surgical & Emergency Services Pavilion* (2010) Santa Monica UCLA Medical Center & Ortho-paedic Hospital* & UCI Douglas Hospital Phase II (2012) UCSD Jacobs Medical Center (est 2016) UCI Douglas Hospital Phase I* (2009) UCSD Hillcrest Seismic Improvements* (2011) & Sulpizio Family Cardiovascular Center (2011) UCSF Benioff Children s Hospital and Mission Bay Women & Cancer Hospital* (est 2015) * Project addresses seismic needs as required by CA Senate Bill
8 UC Health: The Challenges Ahead Increase Quality, Safety and Improve the Patient Experience. Address affordability Demands of Healthcare reform Pressure on commercial patients Potential increase in Medi-Cal Organizing for rapid change is introduced New care delivery models (ACOs) Increased and intense regulatory scrutiny Leverage the assets of the System. 8 8
9 UC Medical Centers* Operating Revenues Millions Millions 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, ,014 Net Patient Revenue Payor Mix FY $5, $5, ,291 3,699 4, ,239 1,352 1,347 1,442 * Includes FPGs $6, $ Operating Income FY $ $6, $ $ Non-Sponsor Contract-Cap Contract-Disc Commercial County Medi-Cal Medicare San Francisco San Diego Los Angeles Irvine Davis 9
10 UC Medical Centers Utilization Statistics Discharges Patient Days Thousands Thousands 1, Outpatient Visits Length of Stay Millions
11 II. PROFILE OF ACADEMIC MEDICAL CENTERS AND KEY PROVISIONS OF HRC REFORM
12 Unique Characteristics of Academic Medical Centers Compared to Other HC Providers More diverse missions and revenue streams- patient care, education, research, philanthropy Greater expenses related to education and research Academic Medical Centers often make support payments to University s school of medicine Patient care income tends to subsidize training and education costs Specialized services or reputation for expertise can enlarge service area and enhance contracting leverage High acuity service lines, often serve as trauma centers Trauma services can result in payor mix that has higher Medicaid percentage Medical staff is often closed, not open to community physicians Hospital physicians hold faculty positions at the University s school of medicine 12
13 Key Provisions of HC Reform Increasing the number of insured Americans Medicaid expansion, individual mandate, insurance exchanges Is there a sufficient number of physicians to serve all the new patients (estimated around 30+ million) While insured population increases, reimbursement rates will go down Cuts to Medicare, Medicaid, DSH, readmission penalties Encouraging formation of Affordable Care Organizations Moving away from fee for service Right care, right time, right setting Greater coordination and population management resulting in increased physician activity and ambulatory strategies 13
14 HC Reform and Academic Medical Centers Encouraging healthcare providers to reduce expenses and consolidate Reducing expenses in anticipation of reduced reimbursement Consolidation offers scale to spread costs (IT, purchasing, management) Opportunity to better coordinate care Unique features of Academic Medical Centers and how that impacts potential consolidation Different cultures at Academic Medical Centers can reduce consolidation opportunities or make them more difficult to pull off successfully Integration of faculty physicians and community physicians Lack of geographic diversification Other Cuts to GME at the same time need for new physicians is growing Outlook for research funding dimming Tax reform and impact on possible impact on philanthropy and also non-profit tax exemption 14
15 III. UCLA HEALTH SYSTEM & UCSF MEDICAL CENTER
16 UCLA Health System Profile Fiscal Year Licensed Beds Admissions 39,982 40,336 40,220 Average Daily Census Discharges 40,030 40,318 40,211 Average Length of Stay Patient Days 263, , ,895 Case Mix Index Outpatient Visits: Clinic Visits 885, , ,287 Emergency Visits 86,100 83,082 81,383 Total Outpatient Visits 971, , ,670 16
17 Mission, Vision, Values UCLA Health System Overview Mission Deliver leading edge patient care, research, and education Vision Heal humankind, one patient at a time, by improving health, alleviating suffering, and delivering acts of kindness Values Compassion; Respect; Excellence; Discovery; Integrity; Teamwork 17
18 UCLA Health System Overview Our goal is to provide the best patient experience with every patient, every encounter, every time. UCLA Health System is a physician-led organization providing the best in health care and latest in medical technology through: A fully-integrated, comprehensive health care system A focus on population health management and commitment to community health Investing in the provision of optimal primary and secondary care delivery Providing world-class tertiary and quaternary care Innovations in patient care and care delivery Prioritizing quality and safety An affiliation with a top-ranked medical school David Geffen School of Medicine Significant managed care experience and expertise Geographic reach with offices throughout the LA area 18
19 Comprehensive Healthcare System UCLA Health System Overview Outpatient Services Over 150 community offices and outpatient clinics 80+ hospital-based and physician-office based specialty clinics available on UCLA Medical Plaza, which is the primary site for the Hospital System s ambulatory care, especially specialty services Approximately 200 primary care and 1,000 specialists providing the full complement of care delivery services Inpatient Services (3-licensed facilities with 806 beds) Ronald Reagan UCLA Medical Center (466 beds) Mattel Children s Hospital UCLA (89 beds) Stewart and Lynda Resnick Neuropsychiatric Hospital at UCLA (74 beds) Santa Monica-UCLA Medical Center and Orthopaedic Hospital (266 beds) FY11-12 Total Revenue Hospital System Revenue $1,820M Medical Group Revenue $655M By the Numbers, FY12 Outpatient Medical Group Encounters 2.57M Hospital-Based Clinic Visits 885K Emergency Registrations 86K Inpatient Discharges 40K Patient Days 263K Average Length of Stay 6.6 days Average Daily Census
20 Population Health Management and Community Health UCLA Health System Overview Population Health Management Shift from volume-based to a value-based care and financing system Care for the right type of patient at the right level of practice from pre-primary to quaternary care Community Health Venice Family Clinic Sun Valley Community Health Center Iris Cantor-UCLA Women s Health Education and Research Center Other Programs UCLA Mobile Clinic Project Imperial Heights Health Center UCLA/Salvation Army Family Outreach Clinic UCLA Mobile Eye Clinic Iris Cantor Mobile Mammography Program Prevention for Elderly Persons Program Cancer Prevention Research Unit Bakersfield/UCLA Outreach Clinic for Pediatric Cancer Community-Based UCLA Oncology Research Network Program Ted Mann Family Resource Center Breathmobile 20
21 Innovations in Patient Care and Care Delivery UCLA Health System Overview Initiatives Accountable Excellence in Population Health focuses on growing the population for which we provide care, and learning how to provide care that reaches patients earlier and more affordably in their homes and communities. Supports transformation of UCLA s primary and secondary care systems to improve care management, deepen patient engagement, optimize the skills and roles of the healthcare workforce, and apply advanced technologies. Accountable Excellence in Advanced Specialty Care improves service standards for consultation and advanced-care systems, demonstrating increased value by reducing net costs of coordinated care by specialty centers and referring providers, and injecting innovation into service and financial models. National Leadership in Innovations that Transforms Care focuses on establishing UCLA as an innovator and leader in care transformation, and particularly in defining the future role of academic medical centers. Quality and Safety are the number one priority Ranked #1 in Patient Satisfaction in the University Health System Consortium 96% of UCLA patients say they would recommend us to a friend or family member UCLA Health System consistently receives high marks from many organizations that publicly report healthcare quality 21
22 Geographic Expansion Strategy UCLA Health System Overview Increase the number patients cared for by the UCLA Health System. Build a strong pre-primary and primary care presence in targeted geographic areas in the greater LA Basin. Create a superior, geographically distributed secondary care system. Secure a tertiary and quaternary care delivery capacity, especially hospital and pre and post hospital care beds and facilities. Create a coherent integrated delivery system that reflects the unique capabilities and requirements of the UCLA Health System in care delivery, medical professions education, and research. 22
23 About UCLA Health System Ronald Reagan Santa Monica Resnick Neuropsychiatric Hospital 772 beds operating near capacity/ 775,000 outpatient visits Regional tertiary and quaternary referral center Large children s hospital within a hospital Ranked #5 by US News & World Report Two sites, to become three (949 licensed beds) 23
24 Government and Private Reimbursement Changes Anticipated in UCSF Financial Forecast Healthcare Reform Lower inpatient growth rates Medicare DSH reduction slightly offset by uninsured coverage Migration from commercial to government based Health Insurance Exchange rates Value based payments Quality-based incentives and penalties - UCSF performing well Volume based reimbursement transition to value-based reimbursement anticipate challenges Budget Deficit/Fiscal Cliff Sequestration Medical Centers Research enterprise Anticipated Medical Education reduction Conclusion: Advance Market Position strategies Dual Market Continue Expense Structure Management plans Evolve strategic Capital Management plan 24
25 Competitive/Market Position Dual Market long term strategy Strengthen clinical & program affiliations Develop Bay Area wide accountable care organization Financial forecast anticipates slight market share improvement over next five years Part of strong University of California system Viewed favorably in geographic referral region Patient s view as a must-have Provider s (referring) view as best quality and patient-focused organization Many outlying physicians are UCSF graduates Payer s view as good quality outcomes and reasonable cost provider Mark Laret, AAMC annual meeting presentation theme Lead and dare to think differently Academic Position advantages under Health Care Reform changes Academic Position challenges under Health Care Reform Large, related physician organization with expansion opportunities Residents and research provide innovation-based organization Excellent quaternary/tertiary outcomes and market share Strong market position in key specialties Increased support for education and research required under government budget pressures Higher cost academic setting will require continued efficiency improvements 25
26 Expense Structure Management Continue 5 Year Margin improvement plan ($323M), update annually Traditional efficiency (aligned incentive compensation goals) Productivity improvements Non-Labor cost reduction committees (hospital operations, service lines and center for healthcare value) Fixed Cost structure reduction Review multiple site opportunities for clinical service consolidation Back-office consolidation Update Funds Flow School of Medicine Strategic and Purchased Services support aligned Patient Affordability High quality patient care efficiency to improve Value for purchasers of care Leader & innovator of quaternary high cost population management Medi-Cal medical home program, DSRIP Employee health plan offering with risk CMS bundled payment participation Virtual Care EHR & telemedicine Campus support create margin-aligned support for UCSF Schools and Research enterprise UC System initiatives Meet regulatory requirements 26
27 Capital Management Ensure Capital for Strategic investments Mission Bay ($1.5B) Children s and Cancer Hospital Clinical IT system ($165M) Children s Hospital & Research Center Oakland Affiliation Physician organization affiliations Clinical service affiliations (i.e., cancer, outpatient facilities, post-acute settings) IT Capital Strategy Optimization focused on quality, patient access, and efficiency Ensure ICD-10 ready Equipment Capital Strategy Current equipment inventory is new and state of the art ROI expectations through efficiency and value Facilities Capital Strategy Regulatory requirements and patient safety Patient flow and satisfaction Service consolidation/efficiency opportunities 27
28 UCSF Medical Center Profile Fiscal Year Licensed Beds Admissions 27,788 28,268 29,087 Average Daily Census Discharges 27,831 28,273 29,098 Average Length of Stay Patient Days 179, , ,641 Case Mix Index Outpatient Visits: Clinic Visits 775, , ,635 Home Health Visits 17,850 16,704 18,468 Emergency Visits 37,560 36,051 36,426 Total Outpatient Visits 830, , ,529 28
29 About UCSF Medical Center Parnassus Campus Medical Center at Mount Zion Benioff Children s Hospital 722 beds operating near capacity/ 775,000 outpatient visits Regional tertiary and quaternary referral center Large children s hospital within a hospital Ranked #13 by US News & World Report Two sites, to become three (949 licensed beds) 29
30 IV. Q&A 30
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