Blackstone Inc. · NYSE:BX
Blackstone — National Payment Innovation Summit 2016
24 slides from Blackstone's conference presentation, Feb 11, 2016
Slide 1: Employers & Payment Reform
Confidential Employers & Payment Reform “It’s Not Just Whether We Reform But How We Do It” National Payment Innovation Summit Memphis, TN February 11, 2016
Slide 2: Today
Equity Healthcare Confidential Today Employer-sponsored insurance (ESI): A primer The revolution in health benefit design Clear thinking on payment reform eHarmony: marrying benefit design with payment reform Blackstone 1
Slide 3: What's the WIFFM for Providers?
Equity Healthcare Confidential What’s the WIFFM for Providers? Why should I care about employers given the fact that I never see these guys, only a couple of them seem to be in the game, and it’s insurers and the government that pay me? Commercial revenues are an important source of cost shift and
Slide 4: I. Employer Primer
I. Employer Primer
Slide 5: ESI Primer
Equity Healthcare Confidential ESI Primer Unique to U.S. In the game for employee recruitment/retention, skepticism about government --- not love of healthcare Powerful but influence market in unique fashion: • Unified at a high level: influence on government policy and health insurers • Catal
Slide 6: Not All Employers Are Alike
Equity Healthcare Confidential Not All Employers Are Alike 150MM Lives Small Employers Medium Employers Large Employers Jumbo Employers (<200 Employees) (200–999) (1,000–4,999) (5,000+) 5.7 million Employers 36.5K Employers 6.9K Employers 1.8K Employers 48.5 million Lives 22 million Live
Slide 7: The ACA: Play or Pay
Equity Healthcare Confidential The ACA: Play or Pay One of major milestones in ESI history • Tax deductibility: 40’s & 50’s • ERISA: 70’s • Retiree accounting change: 90’s • Obamacare: 2010 ACA impact • Play • ‘Creditable’ and affordable coverage • Cadillac or excise tax • Pay • Potential exit: guar
Slide 8: It's All about Stratification
Equity Healthcare Confidential It’s All about Stratification Group I: Don’t offer today Group II: Offer today – could play, could pay In sectors with high turnover, part-time jobs and non-technical workers Group III: Offer today and will continue to offer In sectors with high degree of labor com
Slide 9: Mark Twain / Jean-Paul Sartre quotes
Equity Healthcare Confidential “Reports of My Death Have Been “No Exit” Greatly Exaggerated” Mark Twain Jean-Paul Sartre Blackstone 8
Slide 10: II. Revolution in Benefit Design
II. Revolution in Benefit Design
Slide 11: What I Hear from CEO's – A Paradigm Shift
Equity Healthcare Confidential What I Hear from CEO’s – A Paradigm Shift “How Employers Are Responding to the ACA” – Robert Galvin, MD February 2016 Old “We pay 80% of costs and leave it to health insurers to manage the rest – it’s up to employees to decide how engaged they want to be in their hea
Slide 12: Designs and Programs Driving Consumerism
Equity Healthcare Confidential Designs and Programs Driving Consumerism CDHP PPO or CDHP Employee contribution Employee contribution Buy-up to richer plan Fixed Fixed employer employer subsidy subsidy Defined Contribution: fix contribution at lowest priced plan High Deductible with HSA: influenc
Slide 13: Impact of Benefit Designs on Providers
Equity Healthcare Confidential Impact of Benefit Designs on Providers Decreased utilization in general Increased receivables Price transparency with downward pressure on prices Worries about alternate sites of care & Potential incompatibility with payment reforms – we’ll come back to this
Slide 14: III. Clear Thinking on Payment Reform
III. Clear Thinking on Payment Reform
Slide 15: Jumbo Employers Have Been Innovators in Payment Reform
Equity Healthcare Confidential Jumbo Employers Have Been Innovators in Payment Reform.. Innovators Bridges to Excellence & PROMETHEUS (2003) Patient-Centered Primary Care Collaborative – (2006) CPR (Catalyst for Payment Reform) - (2009) Direct contracting and bundling: Walmart, Target, GE (~
Slide 16: The Rate of Diffusion of Payment Reform Has Been Slow
Equity Healthcare Confidential …But The Rate of Diffusion of Payment Reform Has Been Slow.. Q: What do you consider to be the top 3 most effective steps to control health care cost increase? Full Replacement CDHP 28% 4% 4% Offer CDHP as An Option 15% 6% 4% Increased Employee Cost-Sharing 14% 20% 16%
Slide 17: There Are Some Signs of Growing Momentum
Equity Healthcare Confidential ….But There Are Some Signs of Growing Momentum % Actively Pursuing Yes, Either through Direct Don’t Know Contracting with An ACO 19% or Pushing Health Plans to Pursue ACOs 21% No, Some of Our Plans May Include ACOs but It Isn’t Something We Are Looking for or Promoting
Slide 18: Why Are Employers Not Moving Faster to Payment Reform
Equity Healthcare Confidential Why Are Employers Not Moving Faster to Payment Reform Lack of deep knowledge about the delivery system Skepticism that consolidation and price increases are over-powering real changes in efficiency Lack of trusted evaluation The Tragedy of the Commons due to wo
Slide 19: Next Step: Education and Evaluation
Equity Healthcare Confidential Next Step: Education and Evaluation How-to Guide: Evaluating Payment Reform Programs December 2015 What employers will be looking for: 1) Information: credible data and information that gets to right provider at right time 2) Risk: if not two-sided is it really risk? 3
Slide 20: IV. eHarmony: Marrying Benefit Design and Payment Reform
IV. eHarmony: Marrying Benefit Design and Payment Reform
Slide 21: Alternative Payment Models Framework – (HCP LAN)
Equity Healthcare Confidential Alternative Payment Models Framework – (HCP LAN) Category 1 Category 2 Category 3 Category 4 Fee for Service – Fee for Service – APMs Built on Population-Based No Link to Quality & Link to Quality & Free-for-Service Payment Value Value Architecture A A Foundational A C
Slide 22: Marrying Benefit Design to Payment Models
Equity Healthcare Confidential Marrying Benefit Design to Payment Models Payment Models Benefit Fee PCP Per DRGs / MS- DRGs / Global Bundled Global Shared Design Schedules Cap Diems APGs Budget Episodes Cap Savings P4P Narrow Networks 0 0 0 0 0 0 0 0 0 Reference Pricing 0 0 0 0 0 0 0 0 0 Tiered Netw
Slide 23: This Won't Be Easy….
Equity Healthcare Confidential This Won’t Be Easy…. Example: High deductible plans and ACO with two-sided risk + Less service use means savings for risk-bearers Smarter consumers means more partnering with providers People more focused on health to lower costs line up incentives with providers
Slide 24: Summary
Equity Healthcare Confidential Summary At long last payment reform has momentum But momentum can be bad if you’re a heavy vehicle without a windshield or brakes headed for a cliff Incentives must be aligned between providers, employers, commercial payers and consumers Benefit design not curr