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www.pwc.com/ca Is Deflation of Healthcare Costs a Good Thing? A discussion of current trends in #Canhealth @willfalk April 2015 FOR DISCUSSION PURPOSES ONLY Diagnosing the Illness – The Changing Nature of the Canadian Patient Over the past 40 years, the change in health status across the population has put a strain on a healthcare system that was built primarily to deal with acute illnesses 9yrs Increase in life expectancy PwC 3x Less likely to smoke 1.4x 3x 2.6x Less likely to die from CVD 1.1x More likely to have cancer More likely to be obese FOR DISCUSSION PURPOSES ONLY Less likely to die from cancer 2 The Perception - ‘Out of Control’ Spending Five years ago, there was significant alarm about the recent rise in healthcare spending (in both absolute terms, and as a percentage of GDP)… Total Health Expenditure as a % of GDP, Canada Source: National Health Expenditure Database, 1975-2009, CIHI PwC FOR DISCUSSION PURPOSES ONLY 3 The Response – Applying the Brakes …but government responded, slowing the rate of growth dramatically across all sectors of the healthcare system 9.0 Ontario Healthcare Spending by Sector – Growth rate from prior year, 2009 vs. 2014 (forecast) 8.0 7.0 6.0 5.0 % 2009 4.0 2014f 3.0 2.0 1.0 0.0 Hospitals Physicians Drugs Other Source: National Health Expenditure Database, 1975-2014, CIHI f: Forecast Drugs category does not include those dispensed at Hospitals or other institutions PwC FOR DISCUSSION PURPOSES ONLY 4 The Result – Reduction in Spending When measured as a % of GDP, health expenditure is down considerably in Canada since 2009 (1.4% in Ontario) Total Health Expenditure as a % of GDP, Canada Source: National Health Expenditure Database, 1975-2014, CIHI PwC FOR DISCUSSION PURPOSES ONLY 5 Variances Across Canada But this hasn’t been consistently applied across Canada – there’s potentially more pain to come Canadian and Provincial Healthcare Spending by Sector – Growth rate from prior year, 2009 vs. 2014 (forecast) 10.0% 8.0% 6.0% 4.0% Canada 2009 2.0% Ontario 2014f Alberta 2014f 0.0% Hospitals Physicians Drugs Other Rest of Canada 2014f -2.0% -4.0% -6.0% Source: National Health Expenditure Database, 1975-2014, CIHI f: Forecast Drugs category does not include those dispensed at Hospitals or other institutions PwC FOR DISCUSSION PURPOSES ONLY 6 Health Care in Canada: Five Innovation Trends A Focus on “Frequent Flyers” as a Solution to Integration and Appropriateness Clinician Supply: The Rise of Retail Pharmacy, Large B Primary Care Groups , and Specialty Unemployment. C Financing Reform: Moving Away from Global Budgets and towards Bundled Payments D Digitization Continues and Morphs into mHealth and Quantified Self E “Health Everywhere”: The Rise of New Health Entrants PwC FOR DISCUSSION PURPOSES ONLY 7 A Integrated Care for Complex Patients The notion of 1% and 5% “frequent flyers” is now central in policy discussions Figure 1. Health Care Cost Concentration: Distribution of health expenditure for the Ontario population, by magnitude of expenditure, 2007 Ontario Population 0% 10% Health Expenditure 1% 5% 10% 20% Expenditure Threshold (2007 Dollars) 34% 30% $33,335 40% 50% 50% 66% 60% 79% $6,216 70% $3,041 80% 99% 90% $181 100% PwC Source: ICES FOR DISCUSSION PURPOSES ONLY 8 (Modern and Appropriate DIGITISATION Evidence-Based Delisting) How can physicians and patients have the important conversations necessary to ensure the right care is delivered at the right time? Choosing Wisely® aims to answer that question. An initiative of the ABIM Foundation, Choosing Wisely is focused on encouraging physicians, patients and other health care stakeholders to think and talk about medical tests and procedures that may be unnecessary, and in some instances can cause harm. To spark these conversations, leading specialty societies have created lists of “Things Physicians and Patients Should Question” — evidence-based recommendations that should be discussed to help make wise decisions about the most appropriate care based on a patients’ individual situation. Consumer Reports is developing and disseminating materials for patients through large consumer groups to help patients engage their physicians in these conversations and ask questions about what tests and procedures are right for them. More than 35 specialty societies have now joined the campaign, and 17 unveiled new lists on February 21, 2013 PwC FOR DISCUSSION PURPOSES ONLY Slide 9 B Rise of the Big Primary Care Groups Pressures on GPs, alongside system reforms, have led to the rise of Primary Care groups Appletree Medical Group – 220 Primary Care Providers Oshawa Clinic – 127 Primary Care Providers Jack Nathan Health – 52 Canadian Clinics Primacy Clinic – 140 Canadian Clinics Guelph Family Health Team – 137 Primary Care Providers Wise Elephant Family Health Team – 25 Primary Care Providers McMaster Family Health Team– 31,000 patients The Peterborough Clinic – 127 Primary Care Providers Women's College Hospital Family Practice Health Centre – 50 Primary Care Providers PwC FOR DISCUSSION PURPOSES ONLY 10 B Pressures in Canadian Retail Pharmacy An excess of skilled pharmacists, combined with lower funding is creating the need to transform the role of the pharmacist and by extension, the pharmacy itself Excess pharmacist capacity due to: • Increased automation in pharmacies • Independents and chains like Target closing down • Rise in internationally trained pharmacists entering Canada due to new immigration policies PwC FOR DISCUSSION PURPOSES ONLY 11 High-Number of Hospital-based Specialists Unable to Find Work Shortly after Graduation, 2011 and 2012. Source: Frechette et al. (2013) 100 90 80 70 Percent 60 50 40 30 20 10 - PwC FOR DISCUSSION PURPOSES ONLY Slide 12 Specialists Growing Faster than Population as Wait Times Persist, 1999 to 2013. Specialist Physician and Population Growth (1999=1.0) 1.5 1.4 1.3 1.2 1.1 1.0 0.9 0.8 1999 2000 2001 2002 2003 2004 2005 Number of Specialists (1999=1.0) PwC 2006 2007 2008 2009 2010 2011 2012 2013 Population (1999=1.0) FOR DISCUSSION PURPOSES ONLY Slide 13 C Move from Global Budgets to Patient-Based Funding Models New funding models are driving innovation and a greater awareness of variations in care provision Target Funding Model – Ontario Hospital Sector April 2014 April 2012 HBAM 40% Global 55% HBAM 40% Global 30% QBP 30% QBP 5% PwC Source: MOHLTC FOR DISCUSSION PURPOSES ONLY 14 D The Rapid Transition of Care: From the Office to Virtual By 2020, more than 25% of care will be delivered virtually (with provider and patient in separate places). - Dr. Ed Brown, 2012 many small pilots PwC 25% FOR DISCUSSION PURPOSES ONLY 15 D The Proliferation of mHealth Tools and Applications While still in the early phase of the adoption curve, mHealth tools are becoming more and more prevalent across almost all care settings PwC FOR DISCUSSION PURPOSES ONLY 16 Consumer empowerment Canada’s consumers are demanding modernization Source: PwC Canada - Making Care Mobile PwC FOR DISCUSSION PURPOSES ONLY Slide 17 This is already happening at Kaiser PwC FOR DISCUSSION PURPOSES ONLY Slide 18 D The Apps Pharmacy: Natural Extension to Drug Fulfilment Tech Rx Apps Pharmacy not Apps Store Take 2 Apps and Call Me in the Morning Apps Formulary PwC AliveCor Cardiac Withings Blood Pressure bant Diabetes Pain Squad Pain Mgmt MyIBD Crohn’s Disease FOR DISCUSSION PURPOSES ONLY 19 D Relieving the Need for Direct Face-to-Face Interactions These tools can be used to effectively upskill providers, enable virtual consultations, or even empower effective self-care Traditional Traditional Providers Health Care Setting Physician Extender / Retail Virtual Consultations The delivery of convenient, in-person care in a traditional retail clinic setting The use of videoconferencing and telepresence capabilities to provide common consultations Enhance Enhance existing retail clinic offerings and experience PwC Expand Expand telehealth pilot capabilities FOR DISCUSSION PURPOSES ONLY Virtual Do-it-yourself healthcare The use of connected health devices and remote patient monitoring devices to diagnose common conditions and monitor chronic diseases Innovate Deliver customers innovative DIY health offerings 20 E A New Health Economy: Disruption by New Entrants Nearly half of the Fortune 50 companies are new entrants eager to leverage their consumer assets Critical assets include: • Global reach • Consumer insights • Trusted brands PwC FOR DISCUSSION PURPOSES ONLY 21 E The Potential Future: Healthcare as a Truly Retail Business In the US, “Care anywhere” offerings are gaining traction among customers and clinicians alike … Consumers likely to choose DIY over traditional option 58% Use an at-home strep test at a store 55% Check vital signs at home with device on phone 54% Send digital photo of skin problem to dermatologist 47% 44% 42% PwC Clinicians comfortable using DIY option to prescribe meds Check for ear infection using device on phone Have ECG at home using device attached to phone Do urinalysis test at home with device on phone … while both new entrants and existing providers are capitalizing on the growth in video consultations and DIY health Pharmacy Competitor 43% 53% 48% 26% Working with startup MDLive to offer video visits with board-certified doctors through the retail pharmacy chain's mobile app Smart Care Doc™ opened America’s first telemedicine clinic at Walmart with Bluetooth-enabled diagnostic devices Traditional Provider 32% 47% FOR DISCUSSION PURPOSES ONLY Retail Competitor HealthPartners launched Virtuwell, a 24/7 online clinic that reinvents the diagnosis and treatment experience for everyday illnesses 22 Thank you Will Falk Managing Partner, Health Industries 416.317.9232 [email protected] Twitter: @willfalk This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. © 2015 PricewaterhouseCoopers LLP, an Ontario limited liability partnership. All rights reserved. PwC refers to the Canadian member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. FOR DISCUSSION PURPOSES ONLY 23 Hospital Standardized Mortality has declined 18% (Ontario FY09-13) Ontario Average HSMR FY 2009 FY 2010 FY 2011 FY 2011 FY 2013 104 98 92 89 85 115 110 2009-10 105 2013-14 100 95 90 85 80 75 70 65 Source: HSMR Region Results Ontario, 2014, CIHI PwC FOR DISCUSSION PURPOSES ONLY Slide 24 Even Fraser puts Ontario First in Access! Median Wait Time by Province, 2014 Weeks waited from Referral by GP to Treatment PwC FOR DISCUSSION PURPOSES ONLY Slide 25