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WELCOME To The First Annual ASQ Cincinnati Healthcare Quality Awards Dinner and Ceremony

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Title: WELCOME To The First Annual ASQ Cincinnati Healthcare Quality Awards Dinner and Ceremony


1
WELCOMETo The First Annual ASQ
CincinnatiHealthcare Quality Awards Dinner and
Ceremony
2
CHALLENGES FACING HEALTHCARE PROVIDERS IN
TODAYS TURBULENT FINANCIAL TIMESPresented
by BRUCE W. JOHNSONChairman, ASQ Cincinnati
SectionPresident, Johnson Consulting Services
3
Challenges Confronting our Healthcare System
  • Perceptions of our healthcare system
  • Government reports other studies
  • Shortage of healthcare workers
  • Changing demographics
  • Healthcare requirements of seniors
  • Complexity and fast pace of scientific discovery
  • Complex Inadequate Healthcare System
  • Medical errors
  • Medication errors

4
Challenges Confronting our Healthcare System
  • Pharmaceutical Co Marketing
  • Escalating healthcare costs
  • Impact on US businesses
  • Impact on US Economy
  • Foreign Competition
  • Is nationalized healthcare the answer
  • Can we afford it?

5
PERCEPTIONS OF OUR HEALTHCARE SYSTEM
6
Perceptions of our Healthcare System
  •   In a 1998 Harris and Associates poll, 79
    percent of the sample said the healthcare system
    needs either fundamental change or to be
    completely rebuilt.

7
Perceptions of our Healthcare System
8
Government Reports Other Studies
  •   In their report on Crossing the Quality
    Chasm A New Health System for the 21st Century
    (2001), the IOM states that The U.S. healthcare
    delivery system does not provide consistent,
    high-quality medical care to all people.

9
Government Reports Other Studies
  •  First National Report Card on Quality of
    Healthcare in America published by the Rand Corp.
    in 2006, reported that Quality varied
    substantially across conditions, for example
    people with high blood pressure received about
    65 of the recommend care, people with alcohol
    dependence received about 11.
  • Healthcare also varies significantly by community
    and ethnic groups.

10
Government Reports Other Studies
  •   The IOM National Roundtable on Healthcare
    Quality in 1998 concluded that Serious and
    widespread problems exist throughout American
    medicine. These problems, which may be classified
    as underuse, overuse, or misuse, occur in small
    and large communities alike, in all parts of the
    country, and with approximately equal frequency
    in managed care and fee-for-service systems of
    care. Very large numbers of Americans are harmed
    as a direct result. Quality of care is the
    problem, not managed care. Current efforts to
    improve will not succeed unless we undertake a
    major, systematic effort to overhaul how we
    deliver health care services, educate and train
    clinicians, and assess and improve quality.

11
Comparison with Other Counties
  •  The United States spends more money on health
    care than any other country in the Organization
    for Economic Cooperation and Development (OECD).
    The OECD consists of 30 democracies, most of
    which are considered the most economically
    advanced countries in the world. According to
    OECD data, the United States spent 6,102 per
    capita on health care in 2004 more than double
    the OECD average. CRS Report for Congress
    (2007).
  • In two additional studies conducted by the
    Commonwealth Fund, a healthcare think tank, the
    US health care system ranks last among other
    major rich countries for quality, access and
    efficiency.

12
Shortage of Healthcare Workers
13
Shortage of Healthcare Workers
  • The Council on Graduate Medical Education
    predicts that the nation is likely to experience
    a shortage of 96,000 physicians by 2020 (2005).
  • The Health Resources and Services Administration
    predicts that the national nursing shortage will
    top 800,000 by 2020 (2002).
  • Other staff shortages are also expected,
    including Nuclear Medicine Technologists, MRI
    Technologists, Ultrasound Technologists, and
    Physician Assistants.
  • Only 2.5 of the graduating physicians are going
    into primary care practice.

14
CHANGING DEMOGRAPHICS
15
The Baby Boomers are Retiring
16
Changing Demographics
  • Every day in America, 10,068 people turn 50
  • There are now more people over 65 in our
    population than there are teenagers
  • The number of Americans over 65 is expected to
    double by 2030 to 65 million 9 million will be
    over 85, compared with 4 million today.
  • The population aged 65 - 85 years is the
    fastest-growing age group in the United States.
  • What is the impact on healthcare?

17
Healthcare Requirements of Seniors
  • 86 percent of Medicare beneficiaries have one or
    more chronic conditions
  • Add to this the fact that 16 of all people over
    the age of 71 have a dementia and the challenges
    become even more dramatic.

18
A COMPLEX HEALTHCARE SYSTEM
19
System of Healthcare
  • Our reimbursement system does not encourage
    prevention
  • Our reimbursement system does not encourage the
    coordination of care
  • The US healthcare system is designed primarily to
    address emergency and acute care, yet
  • 75 of all healthcare costs arise directly from
    chronic diseases (high blood pressure, diabetes,
    obesity, asthma, etc.)

20
System of Healthcare
  • 86 of Medicare beneficiaries have at least 1
    chronic disease.
  • Americans with chronic diseases receive only
    about 56 of recommended treatment.
  • The direct medical and indirect cost of diabetes,
    for example accounts for 132 billion annually
    (10 of healthcare dollars 45 million office
    visits).
  • McGlynn, et al, The Quality of Healthcare
    Delivered to Adults in the United States. NEJM
    2003348(26)2635-2645.

21
System of Healthcare
  • 86 of Medicare beneficiaries have at least 1
    chronic disease.
  • Americans with chronic diseases receive only
    about 56 of recommended treatment.
  • The direct medical and indirect cost of diabetes,
    for example accounts for 132 billion annually
    (10 of healthcare dollars 45 million office
    visits).
  • McGlynn, et al, The Quality of Healthcare
    Delivered to Adults in the United States. NEJM
    2003348(26)2635-2645.

22
COMPLEXITY FAST PACE OF SCIENTIFIC DISCOVERY
23
Complexity the Fast Pace of Scientific Discovery
  • Every year 500,000 new healthcare articles are
    published
  • The amount of (all) technical information is
    doubling every 2 years.
  • Four exabytes of unique information (4 x 1019)
    will be generated this year. That is more than
    the last 5,000 years
  • Half of what students with a 4 year technical
    degree learn will be out of date before they
    graduate

24
PATIENT DISEASE MANAGEMENT AND COMPLIANCE
25
Patient Disease Managementand Compliance
  • Patient Attitudes and Behavior
  • Too many patients wait until they have
    developed an illness to worry about healthcare
    and then there is the attitude that they can
    simply take a pill and then continue their
    unhealthy lifestyle, including
  • Non compliance with treatment interventions
  • Poor diets over eating
  • Lack of exercise
  • Smoking
  • Drinking
  • Risky activities
  •  

26
Operational Challenges in the Physician Office
27
Operational Challenges in the Physician Office
  • Michigan Primary Care Consortium conducted a
    needs assessment of the top obstacles to office
    efficiency
  • Problems with support staff
  • Poor reimbursement for services
  • Excessive paperwork
  • Prior authorization requirements
  • Lack of electronic medical records or
    difficulties transitioning to the EMR
  • Patients skipping appointments

28
Operational Challenges in the Physician Office
  •  
  • In an article by Morrison and Smith, BMJ
    2000 3211541, they said Across the globe
    physicians are miserable because they feel like
    hamsters on a treadmill. They must run faster to
    just stand still The result of the wheel going
    faster is not only a reduction in the quality of
    care but also a reduction in professional
    satisfaction and an increase in burnout among
    doctors.

29
MEDICAL ERRORS
30
IOM Report To Err is Human
  • At least 44,000 people, and perhaps as many
    as 98,000 people, die in hospitals each year as a
    result of medical errors that could have been
    prevented, according to estimates from two major
    studies.
  • The problem is not bad people in health care
  • it is that good people are working in bad
    systems that need to be made safer.
  • According to Dr. Deming, 85 of problems
    with quality are due to the process and 15 the
    people.
  •  

31
Medical Errors
  • The average ICU patient experiences 1.7 medical
    errors per day, nearly 1/3 of those are
    life-threatening. Most involve communication
    problems. - Robert Wachter, The End of the
    Beginning Patient Safety Five Years After To
    Err is Human.
  • According to IHI, there are some 37 million
    hospital admissions each year in the United
    States and 40 50 patient injuries for every 100
    admissions. If those statistics are correct
    that translates into 15 million patient injuries
    every year.

32
IOM Report To Err is Human
  • Beyond their cost in human lives, preventable
    medical errors exact other significant tolls.
    They have been estimated to result in total costs
    (including the expense of additional care
    necessitated by the errors, lost income and
    household productivity, and disability) of
    between 17 billion and 29 billion per year in
    hospitals nationwide. (IOM To Err is Human
    Building a Safer Health System, 1999)
  •  

33
Medical Errors
  • By way of comparison
  • If the 98,000 deaths per year due to
    iatrogenic causes is accurate - that is
    equivalent to a jumbo-jet crash every day!

34
MEDICATION ERRORS
35
Medication Errors
  • IOM estimates that 1.5 million Americans a year
    are injured after receiving the wrong medication
    or the incorrect dose and that number is twice
    what it was a decade ago.
  • Serious injuries associated with medication
    errors reported to the Food and Drug
    Administration increased from about 35,000 in
    1998 to nearly 90,000 in 2005.
  • Of those cases, more than 5,000 deaths were
    reported in 1998 and 15,000 deaths in 2005.
    Rong-Gong Lin II and Teresa Watanabe, Hospital
    Drug Errors Far From Uncommon, Los Angeles
    Times, Feb. 15, 2008.

36
Medication Errors
  • The extra medical costs of treating
    drug-related injuries occurring in hospitals
    alone conservatively amount to 3.5 billion a
    year, and this estimate does not take into
    account lost wages and  productivity or
    additional health care costs, the report says.
    The National Academies, IOM, 2006.

37
Medication Errors
  • The American Hospital Association lists these as
    some common types of medication errors
  • Incomplete patient information (not knowing about
    patients' allergies, other medicines they are
    taking, previous diagnoses, and lab results, for
    example)
  • Unavailable drug information (such as lack of
    up-to-date warnings)
  • Miscommunication of drug orders, which can
    involve poor handwriting, confusion between drugs
    with similar names, misuse of zeroes and decimal
    points, confusion of metric and other dosing
    units, and inappropriate abbreviations

38
Medication Errors
  • Lack of appropriate labeling as a drug is
    prepared and repackaged into smaller units
  • Environmental factors, such as lighting, heat,
    noise, and interruptions, that can distract
    health professionals from their medical tasks.
  • Name confusion is among the most common causes of
    drug-related errors, says Peter Honig, M.D., an
    FDA expert on drug risk-assessment. A recent
    example the sound-alike names for the
    antiepileptic drug Lamictal and the antifungal
    drug Lamisil.
  • Incorrect dosage, e.g. 100 mg instead of 100 ug

39
Pharmaceutical Co Marketing
40
Pharmaceutical Co Marketing
  • The Research-based pharmaceutical industry
    spends more on marketing and administration than
    it does on research and development. (Families
    USA)
  • Since 1995, RD staff of U.S. brand name drug
    companies have decreased by 2, while marketing
    staff have increased by 59. Currently, 22 of
    staff are employed in research and development,
    while 39 are in marketing (PhRMA Industry
    Profile 2000 percentages calculated by Sager and
    Socolar.

41
Pharmaceutical Co Marketing
  • According to industry estimates, drug companies
    spent 15.7 billion dollars on promotion in 2000.
    7.2 billion dollars worth of free samples were
    distributed that year (IMS Health).
  • U.S. Drug spending increased 17.1 to 154.5
    billion dollars in 2001. One-quarter of this
    increase was due to a shift to the use of more
    expensive drugs.  (National Institute for Health
    Care Management)

42
Pharmaceutical Co Marketing
  • In a study by Avorn, et al., forty-six of
    physicians reported that reps are moderately to
    very important in influencing their prescribing
    habits (Am Journal of Med. 1982).
  • In a study by Lurie, et al., one-third of medical
    residents reported that they change their
    practice based on information provided by drug
    reps (Journal of Gen Int Med., 1990).
  • A study by Chew, et al., found that in the
    treatment of hypertension, over 90 of physicians
    would dispense a sample that differed from their
    preferred drug choice. (JGIM, 2000).

43
HEALTHCARE COSTS
44
Healthcare Costs
  • Each year the United States spends 2.5 trillion
    dollars on healthcare
  • How much is that?

45
Healthcare Costs
  • How much is 1 billion dollars?
  • 1 billion seconds ago it was 1959
  • 1 billion minutes ago Jesus was alive
  • 1 billion hours ago our ancestors were living in
    the stone age.

46
Healthcare Costs
  • How much is 1 trillion dollars?
  • One trillion seconds 30,000 years
  • 1 trillion dollars would purchase 5.7 million
    homes
  • 1 trillion 1,000 dollar bills stacked on top on
    each other would be 67 miles high
  •  

47
Healthcare Costs
  • Healthcare costs including hospitals and nursing
    homes increased by almost 300 from 1990 to 2005.
  • Healthcare costs are presently rising at about
    five times the rate of overall inflation.
  • A Harvard study in 2005 concluded that half of
    all U.S. bankruptcy filers stated that medical
    expenses led to their financial downfall and most
    of them had health insurance. This was a 30-fold
    increase from a similar study conducted in 1981.

48
Cost of Medications
  • In 2006, U.S. adult consumers spent 130.8
    billion on five therapeutic classes of
    prescription drugs. Expenditures on metabolic
    agents (drugs to lower blood sugar, reduce
    cholesterol, or help with other metabolic
    problems) ranked first at 38.1 billion, followed
    closely by cardiovascular agents (drugs for
    reducing high blood pressure and treating heart
    conditions) at 33.1 billion. The remaining three
    therapeutic classes that topped expenditures were
    central nervous system agents (28.2 billion),
    psychotherapeutic agents (17.5 billion), and
    hormones (14.0 billion). These purchases
    accounted for 62.8 percent of the total 208.1
    billion spent on all prescribed drug medicines.
    From Statistical Brief 232 Statistical Brief
    232 The Top Five Therapeutic Classes of
    Outpatient Prescription Drugs Ranked by Total
    Expense for Adults Age 18 and Older in the U.S.
    Civilian Noninstitutionalized Population, 2006

49
Healthcare Costs for Medications
50
Healthcare Insurance
51
Medicare Costs
52
Healthcare Insurance
  • PricewaterhouseCoopers reported that health
    benefit costs were expected to jump between 10.7
    and 11.9 percent in 2007.
  • Health insurance premiums increased an average of
    11 percent per year from 2002 to 2007.
  • The average annual family health insurance
    premium grew to 11,480 in 2006.
  • In 2005, the number of Americans without health
    insurance rose by 1.3 million to 46.6 million or
    15.9 percent of the population.

53
IMPACT OF RISING HEALTHCARE COSTS ON BUSINESS
54
Impact of Escalating Healthcare Costs on
Employers
  •  Many companies with less than 25 employees have
    absorbed yearly premium increases of as much as
    25 percent or more.
  • In response to increasing healthcare premiums,
    employers are shifting more of the burden for
    insurance coverage to the employee.
  • The cost of healthcare in the U.S. is making
    American businesses extremely uncompetitive
    versus our global competitors.
  • Dr. Deming criticized excessive medical costs
    in his book, Four Days with Dr. Deming as one
    of his 7 Deadly Sins for business.

55
Impact on the Automotive Industry
  •  The cost of healthcare for General Motors is
    approximately 6 billion annually.
  • Healthcare costs add about 1,500 to the price of
    each car, twice as much as the cost of steel and
    double the cost of labor.
  • In the latest sign of the deepening troubles,
    G.M. reported a stunning second- quarter loss of
    15.5 billion because of a continuing fall in
    United States sales and charges for job cuts,
    plant closings and the falling value of trucks
    and sport utility vehicles (New York Times,
    August 2, 2008).
  • That followed a loss of 8.7 billion reported by
    Ford. Overall sales fell by 13 percent in July
    (New York Times, August 2, 2008).

56
Can Quality Management Make a Difference?
  • In contrast to U.S. auto manufacturers, Toyota
    was nearly bankrupt in 1949. By implementing
    what has become know as the Toyota Production
    System (TPS) they have become the benchmark by
    which American Automotive companies are measured.
  • Today, Toyotas solid growth could put it ahead
    of General Motors as the world's No. 1 automaker.
  • They reported a 34 rise in profit for the
    quarter ended Dec. 31,2008 as sales jumped in
    North America and Asia. (USA Today, January 2,
    2008).

57
Is Nationalized Healthcare the Answer?
  • The question is, can we afford it?
  • Can government manage healthcare as well as they
    did the banking industry?

58
Current Economic Climate is Questionable
  • Federal debt has increased exponentially in last
    decade. In 2007 it was around 9,000,000,000,000
    or 30,000 per person.
  • That number has grown substantially in 2008 and
    continues 2009
  • Federal spending shows no signs of slowing.

59
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60
More Good News
  • Baby boomers are retiring and will begin to draw
    on Social Security, Medicare and Medicaid all of
    which are headed for a deficit position
  • The ratio of 20 to 64 year olds is decreasing so
    there will be fewer workers to support the
    retired baby boomers
  • Additionally, the savings rate of Americans is
    the lowest it has been in history and these
    numbers were recorded before the stock market
    crash, real estate bubble burst and the meltdown
    of the financial markets.

61
Social Security Administration predicts deficit
  • The annual report from Social Security's
    Board of Trustees outlining the financial status
    of the Social Security program was released March
    17, 2007. Michael Tanner, director of the Cato
    Institute's Project on Social Security Choice,
    says
  • "This year's report reinforces what we already
    know that Social Security faces massive
    long-term deficits and needs to be reformed, and
    the sooner the better. With each passing year
    Social Security's multi-trillion dollars deficits
    increase and the cost of fixing the system
    rises."

62
OASI ASSETS AS A PERCENT OF ANNUAL EXPENDITURES
63
  • Associated Press, Mon., Jan. 30, 2006
  • WASHINGTON Americans personal savings rate
    dipped into negative territory in 2005, something
    that hasnt happened since the Great Depression.
    Consumers depleted their savings to finance the
    purchases of cars and other big-ticket items.

64
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