A Payers Perspective

1
Arizona Health Care Forecast 2005 Crisis or
Opportunity?
December 8, 2004
A Payers Perspective Jonathan Dinesman, VP
Western States UnitedHealthcare
St. Lukes Health Initiatives
2
Arizona Local Headlines

• Boomers get wake-up call Clintons health
  makes mortality a reality
• Arizona Republic, September 8, 2004
• Men rushing to get hearts checked out
• Arizona Republic, September 11, 2004
• Health premiums devouring paychecks
• Arizona Republic, September 10, 2004
• Doctors fight insurance rates
• Arizona Republic, December 5, 2004
• Luxury home sales soar
• Arizona Republic, September 11, 2004

3
Information Explosion
Explosion in Clinically Relevant Knowledge,
Pharmaceuticals Technology

• 20,000 journals
• 17,000 new books
• 6,000,000 references
• 400,000 new entries

4
Increasing expectation for medical care and for
the outcomes of care

2001 Total (s in millions
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130.3
Vioxx
126.1
135.4
Celebrex
89.1
Nexium
Allegra
86
Viagra
85.6
Zocor
70.6
Imitrex
1566.4
66
Flonase
Paxil
65.1
Market Total 2,480
Procrit
59.4
Other
5
User Demand
Many employees still believe that the cost of
their personal health care spending is simply the
copay made when visiting the doctor or picking up
a drug.
6,717
531
106
50
Source Harris Interactive
6
Long term cost outlook

• There is no indication that secular demand for
  health care will slow down if anything it will
  increase driving more cost
• Aging population
• High Tech pharmacy and implantables
• Legislative Benefit Mandates
• Physician Nursing Shortage
• Cost Shifting underfunding
• Resistance to defending quality and cost

7
How Premiums Are Spent
8
Solutions

• Consumerism - individuals MUST become more
  engaged in their health care to stabilize cost
  trends
• Government Policy
• Encourage price transparency
• Do not legislate healthcare market allow free
  market to operate
• Require minimum set of benefits AND participation
• Encourage standardization data sets, technology
  adoption
• Tort reform medical malpractice
• Appropriately fund government healthcare
  (Medicare/Medicaid)
• Demand cost accountability across healthcare
  market
• Patients/consumers
• Providers hospitals, physicians, medical device
  manufactures, pharma
• Financing insurance companies, employers,
  government, individuals
• Evidenced Based Medicine and supporting benefit
  designs

9
Consumerism
10
Summary

• The Consumer Environment is real and will impact
  care delivery over the next several years
• Technology, information, incentives will enable
  
• The hospitals and physicians that succeed in the
  new environment will be those that differentiate
  their value and services
• Payers that succeed will be those that educate
  consumers, purchase care effectively, deliver on
  service
• Cost is everyones responsibility