Follow the Leader Kaiser Imitators or Innovators to

Follow the Leader: Kaiser Imitators or Innovators to Secure Our Nation’s Health? HECTOR FLORES, MD CHAIRMAN, DEPARTMENT OF FAMILY MEDICINE WHITE MEMORIAL MEDICAL CENTER MAY 4, 2017 Kaiser REHP (C) FAMILY CARE SPECIALISTS 2017 1

Disclosures/Affiliations 1. 2. 3. 4. Board of Directors, Blue Shield of California Board of Directors, The California Endowment Board of Directors, LA County Medical Association Member, South Los Angeles Healthcare Leadership Roundtable Kaiser REHP (C) FAMILY CARE SPECIALISTS 2017 2

Key Questions 1. Why is Kaiser considered an industry leader? 2. How is everyone else imitating Kaiser? 3. Why is there a safety net? 4. Can the safety net become Kaiser-like? 5. Should Kaiser become safety net-like? 6. Why should we care? Kaiser REHP (C) FAMILY CARE SPECIALISTS 2017 3

USA 2050 q. Total population expected to be 405 million q. National debt at $30 Trillion? q. Annual health care expenditures at $6 Trillion? q 30 -40 million uninsured q. Medicare – about 92 million recipients expected; $1. 5 Trillion q. Hospital Trust (Part A) goes bust in 2030? All bust 2040? q. Medicaid (Medi-Cal) – about 100 million recipients expected; $900 Billion q. What should Congress do? Source: U. S Census Bureau and CMS and Medicare Trust 2013 Kaiser REHP (C) FAMILY CARE SPECIALISTS 2017 4

Sign of Things to Come: USA Vital Signs for Health (IOM) q. Best Care at Lower Cost 2012 q. Vital Signs: Core Metrics for Health and Health Care Progress 2015 – among fifteen measures, includes Individual Engagement Healthy Communities Community Medical Costs Population Spending Burden q. What should Congress do? Kaiser REHP (C) FAMILY CARE SPECIALISTS 2017 5

Reality: LA County’s “Non-System” of Care BOS LAC DHS $11 Billion Public Health Mental Health County Hospitals (4) MLK Community Hospital Metro. Care, EMS, Trauma, PSIP Private Sector $60 Billion PPP, MHLA 150 Private Non-Profit Clinic Sites County 2 MACC Private Hospitals (120) 35 DSH Hospitals Six Comp Centers Insured Uninsured Kaiser REHP Private For-Profit Med Groups (C) FAMILY CARE SPECIALISTS 2017 6

California, A Tale of 3 “States” 37. 5 Million People 2011 2015 $180 B $200 B $43 B 7 M pts. $3 B 7. 4 M $95 B 12. 5 M pt. $3. 5 B 4 M Insurance, Medicare 61% Medi-Cal, State-Sponsored Programs 20% Uninsured 19% (4 out of 5 = “working poor”) “Mainstream Providers” üPhysician Groups üHospitals üKaiser, Molina Health, etc. Served mainly by “Traditional Providers” & “Safety Net Providers” Source: www. statehealthfacts. org 2011, DHCS 2015 Kaiser REHP (C) FAMILY CARE SPECIALISTS 2017 7 7

Special Funding to Subsidize the Uninsured (Besides Cost-Shifting) Medicare -- Hospitals (DSH), GME Government Medi-Cal Hospitals (DSH), Supplemental Pay, GME FQHCs (cost-based) County Systems Out-of-Pocket Community Benefit obligation of non-profits Charity Care Uninsured Private Doctors Kaiser REHP Direct & Indirect Subsidies ER Call Panel Stipends Medical Directorships Indigent Care Hospitalists (C) FAMILY CARE SPECIALISTS 2017 8

Special Funding to Subsidize the Uninsured 1. Disproportionate Share Hospital (Medicare and Medicaid) a. 145 DSH hospitals in California; 35 in LA County b. Private DSH hospital range of payments $3 million to $56 million/year (avg. $14 million); actual uninsured range from 3% to 14% 2. Federally Qualified Health Centers a. 129 FQHCs in California with 740 FQHC practice sites b. Range of fixed payments varies by clinic – $88/visit to $230/visit c. LA County DHS outpatient visits at $303 to $638/visit 3. Rural Health Clinics a. 275 RHCs in California b. Range of fixed payments varies by clinic – $74/visit to $275/visit 4. IRS/FTB Community Benefit Standards – NFPs show tax savings are used 5. Primary Care Medi-Cal “Bump” has ended (2013 -2014) a. Private physician Medi-Cal payments are now lowest in U. S. A. ($24 -44/visit) Kaiser REHP (C) FAMILY CARE SPECIALISTS 2017 9

Back to the Future: Managed Competition*, 1994 1. Consumer Choice of Competing Health Plans a) HMOs and PPOs 2. Competition Based on Cost and Quality 3. Active Role of Health Care Purchasers e. g. , PBGH Cal-PERS CMS State DHCS Covered California *Source: Enthoven, NEJM 1989 Kaiser REHP 10 (c) Family Care Specialists 2017

Kaiser Southern California Kaiser Health Plan SC Kaiser Foundation Hospitals and Clinics SCPMG 4, 000 Partners 1, 500 Employees 1, 000 Per Diem/Contract Kaiser REHP 12 Hospitals 11 (c) Family Care Specialists 2017

The Imitators in LA County: IPA/Network HMOs 20, 000 MD/DO in LA County 100 Hospitals PPO/FFS & Uninsured Patients Kaiser REHP (C) FAMILY CARE SPECIALISTS 2017 12

ACA: Managed Competition and Insider Politics Kaiser REHP (C) FAMILY CARE SPECIALISTS 2017 13

“Free” Market UNSEEN HAND OF PROVIDENCE v. UNSEEN FIST OF SPECIAL INTERESTS Kaiser REHP (C) FAMILY CARE SPECIALISTS 2017 14

HEALTH POLICY CONTINUUM Legislature Federal – Representative/Senator State—Assembly/Senate Local – County Board of Supervisors City Agencies Federal – DHHS State – State DHCS, OSHPD, DPH Local – County DHS, DPH, DMH City – LB, Pasadena Community, Employer and Labor Organizations Provider Organizations and Trade Groups Organized Labor Hospitals (AHA, CHA) and Medical Groups (AMA, CMA, MGMA, CAPG) Consumer Organizations California Primary Care Association (Community Clinics) Academic Medical Centers Health Plans Employer Coalitions Pharmaceutical Companies Patients Trial Lawyers Kaiser REHP (C) FAMILY CARE SPECIALISTS 2017 15

Announcing the Guidelines for ACA, 2009 Kaiser REHP (C) FAMILY CARE SPECIALISTS 2017 16

Elections 2016: Life Imitates Art (C) FAMILY CARE SPECIALISTS 2017 17

President-Elect Trump Repeal and Replace Obamacare? “It’ll be terrific. Believe me!” or “Nobody knew it would be this complicated. ” Senate 52 -46 -2 House 241 -194 Freedom Caucus or Tuesday Group? (C) FAMILY CARE SPECIALISTS 2017 18

Kaiser Model: Smart Policy and Politics § Prepayment allows better allocation of resources §Integrated medical group and Integrated health system §Peer review is alive and well §Longevity of membership with Kaiser allows for long-term investment on population health §Hospitals and medical group are “cost centers” §Political cover No-frills, essential EBM care & investment Unions, AHIP, CMA, CHA §Non-profit health plan Kaiser REHP Unions Preferred by elected officials and Unions, Community Benefit & strategic grants 19 (c) Family Care Specialists 2017

Managed Care 2. 0 – Imitator or Innovator? IT, EBM, Big Data & AHIP Community Benefit, CMA Unions, Community Benefit, AMCs & CHA HMO/FFS & Uninsured Patients Kaiser REHP Post-Acute Care Coordination & Outpatient Shift 20 (c) Family Care Specialists 2017

Shark Tank 2018 ACA or AHCA? And who will pay? Future of Medi-Cal and Exchanges (Covered CA)? California Single Payer (SB 562)? Kaiser REHP (C) FAMILY CARE SPECIALISTS 2017 21

Shark Tank 2050 Who’s model will prevail? And who will pay? – Single Payer? Single Payment? Kaiser REHP (C) FAMILY CARE SPECIALISTS 2017 22

Principles to Lead By: The Four Agreements (Miguel Angel Ruiz, MD) 1. Be impeccable with your word 2. Take nothing personally 3. Do not make assumptions 4. Always do your best Kaiser REHP (C) FAMILY CARE SPECIALISTS 2017 23

“To dream is to create the Future” VICTOR HUGO Kaiser REHP (C) FAMILY CARE SPECIALISTS 2017 24

Thank You! Questions? HECTOR. FLORES@AH. ORG Kaiser REHP (C) FAMILY CARE SPECIALISTS 2017 25