Bending the
Cost Curve
Emerging
International
Best Practices
“No one is smarter
than everyone.”
February 1–2, 2011
1
Dear Colleagues,
As we prepare for the inaugural symposium of Bending the Cost Curve: Emerging International
Best Practices in Washington, DC, we know that each of you is looking for answers. You have
achieved great success and renown in healthcare. Yet, we all are confronted with the nagging
reality that our healthcare systems cost far more than they should.
In the face of aging populations and exploding new technologies, cutting healthcare spending may
be impossible. But, bending the cost curve; that—is within our grasp.
Our symposium is designed to examine how this bending takes shape. Can we apply the proper
pressure on spending to our own geographies? We’ve selected case studies in five countries:
Spain, India, Australia, the Netherlands and the United Kingdom. Each case study was carefully
selected to spark vigorous debate on methods, unintended consequences, and the likelihood of
transferability. Each addresses key ways to bend costs: innovation, shared risk, patient
engagement, standardisation, specialisation, regulatory intervention, collaboration, incentives.
These well-worn terms are all-too familiar to us. However, we plan to breathe new life into them
by collectively vetting these concepts through leading case studies.
The attached document is intended for you to review prior to arrival so you’ll come armed with
knowledge and questions about how these examples can be implemented. Together, we will ask
new questions and tease out the best practices from public and private sectors to improve
healthcare systems.
Tuesday evening’s dinner on Feb. 1 with U.S. Secretary Kathleen Sebelius and our conversation on
Wednesday, Feb. 2, will open new opportunities for you to develop new partnerships and business
relationships, while sharing models and experiences from around the world. As we have stressed,
this is meant to be a highly interactive discussion, drawing on all of your remarkable expertise.
Dr. David Levy
Global Leader, Healthcare
PwC
Frederick Kempe
President and CEO
Atlantic Council
Dr. Richard I Levin
Dean, Faculty of Medicine
McGill University
Karen Davis
President
The Commonwealth Fund
2
Co-sponsors
Atlantic Council
The Atlantic Council promotes constructive U.S. leadership and engagement in
international affairs based on the central role of the Atlantic community in
meeting the international challenges of the 21st century. The Council embodies
a non-partisan network of leaders who aim to bring ideas to power and to give
power to ideas by:
• stimulating dialogue and discussion about critical international issues with
a view to enriching public debate and promoting consensus on appropriate
responses in the Administration, the Congress, the corporate and nonprofit
sectors, and the media in the United States and among leaders in Europe, Asia,
Africa and the Americas;
• conducting educational and exchange programs for successor generations of
U.S. leaders so that they will come to value U.S. international engagement and
have the knowledge and understanding necessary to develop effective policies.
McGill University
McGill University is one of Canada’s best-known institutions of higher learning
and one of the country’s leading research-intensive universities. With students
coming to McGill from about 150 countries, our student body is the most
internationally diverse of any medical-doctoral university in Canada.
The oldest university in Montreal, McGill was founded in 1821 from a generous
bequest by James McGill, a prominent Scottish merchant. Since that time, McGill
has grown from a small college to a bustling university with two campuses, 11
faculties, some 300 programs of study, and more than 36,000 students. The
University partners with four affiliated teaching hospitals to graduate over 1,000
health care professionals each year.
The Commonwealth Fund
The Commonwealth Fund, among the first private foundations started by a
woman philanthropist—Anna M. Harkness—was established in 1918 with the
broad charge to enhance the common good. The mission of The Commonwealth
Fund is to promote a high performing health care system that achieves better
access, improved quality, and greater efficiency, particularly for society’s most
vulnerable, including low-income people, the uninsured, minority Americans,
young children, and elderly adults.
The Fund carries out this mandate by supporting independent research on health
care issues and making grants to improve health care practice and policy. An
international program in health policy is designed to stimulate innovative policies
and practices in the United States and other industrialized countries.
3
Bending the
Cost Curve
Emerging International
Best Practices
A Global Symposium Series
As developed and emerging economies contend with increasing
demand for healthcare services, they face a common challenge:
how to manage the escalating costs while increasing access and
quality. We believe that it will take the collaborative effort of the
best minds from industry, academia and government worldwide
to tackle this challenge.
Bending the Cost Curve is a four-part, two-year global
symposium series designed to create a network for sharing
emerging best practices that can “bend the cost curve.” The
requirement for change is urgent, and there is no sense in
re-inventing the wheel where practical and adaptable solutions
have already proven successful.
4
Over the next two years, the symposium series will bring
together healthcare leaders from around the world who have
hands-on experience in creating new solutions and managing
change for the benefit of communities, patients, families
providers, government, insurers and suppliers. Using a case
study approach, we will introduce and explore several topics that
are relevant for participants. The group is intentionally small, in
order to provide the maximum opportunity for substantive
discussion and networking.
The inaugural symposium will be held on Feb. 2, 2011 in
Washington, DC, with an introductory dinner the prior
evening, to be keynoted by Kathleen Sebelius, Secretary of the
U.S. Department of Health and Human Services. Subsequent
symposia will be held in Europe and Asia. The series will
culminate in a white paper review of significant business stature.
In this packet, you will find an overview of the agenda topics,
case studies, related articles as well as lists of confirmed
attendees and speakers for the Washington, DC, event. While we
understand the demands on your time, a review of the case
studies and related articles will add immeasurably to our
roundtable discussions.
5
Background
The growth in healthcare spending is
unsustainable. In both developed and emerging
nations, healthcare is growing faster than
the overall economy. Since so much of
healthcare is financed through governments,
elected officials are forced to address hundreds
of cost drivers that affect spending. They want
to restrain spending growth, but don’t want to
eviscerate care that is vital to their population’s
health. Calculating health spending growth is a
straight-forward exercise; the solutions to
control it are complex and evolving.
Even so, the numbers are astonishing. Spending
on healthcare among the OECD (Organisation
for Economic Cooperation and Development )
and BRIC (Brazil, Russia, India and China)
nations will grow by 51% between 2010 and
2020, according to estimates from PwC’s Health
Research Institute. According to PwC
projections, the countries that are expected to
have the highest health spending growth
between 2010 and 2020 are China (166%) and
India (140%). For OECD countries, health
spending as a percent of GDP will increase to
14.4% in 2020, up from 9.9% in 2010, according
to PwC estimates. The BRIC nations are
expected to experience even stronger growth in
health spending, as their economies grow, and
they build out their health systems. Health
spending as a percent of GDP is expected to
grow from 5.4% in 2010 to 6.2% in 2020 in
those nations. In actual spending, this amounts
to a 117% increase in spending over the decade,
with China leading the way.
Why are costs so high and rising so fast? We
could point to many culprits, from income
growth to perverse financial incentives.
However, two overarching factors explain much
of the cost acceleration: aging populations and a
surge in chronic illness.
By 2050, 22% of the world’s population will be
at least 60 years old—double the percentage in
2009.i As populations age, medical costs
increase. In the U.S., medical care for a person
over age 65 costs five times more than for
someone younger.ii That’s partly because about
80% of older adults suffer from at least one
chronic condition (e.g., arthritis, osteoporosis)
that requires ongoing treatment.iii This helps to
explain why chronic disease accounts for more
than 75% of healthcare costs in the U.S..iv
Both young and old are developing chronic
diseases in record numbers, leading to an
explosive consumption of resources that is
driving up spending and creating liabilities
for future generations. Unfortunately, many
chronic diseases are fueled by unhealthy
lifestyle choices—mainly smoking, poor diets,
and lack of exercise. Today, half the population
of OECD countries is obese or overweight
(versus 10% in 1980). That’s led to a rise in
chronic conditions like diabetes.v Over the next
two decades, such “lifestyle diseases” are
projected to kill more individuals worldwide
than traditional killers such as tuberculosis,
diarrhea, and infections.vi India is now the
diabetes capital of the world, home to more
diabetics—an estimated 50 million—than any
other country, according to the International
Diabetes Federation.vii
Against this backdrop, participants in
the inaugural Bending the Cost Curve
symposium will explore five case studies that
illustrate how various countries are solving
these pressing issues.
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Case Study 1
The Valencia
Concessional Model:
A PPP Example in Spain
Case Introduction
Sir Richard Feachem, Executive Director,
UCSF Global Health Sciences and Professor of
Global Health, University of California San
Francisco and University of California Berkeley
Partnerships between government and private
organisations are not new in healthcare. For
example, the National Health Service in
England built about 100 new hospitals during
the 1990s through financing vehicles broadly
described as public-private partnerships (PPPs).
However, this model is evolving to introduce
efficiency and innovation more broadly into the
delivery of health.
As the scope of partnership projects in
healthcare grows, so, too, does the size of the
potential market for private organisations.
Between 2010 and 2020, the cumulative
amount spent on healthcare infrastructure is
estimated to be $3.6 trillion, according to PwC
projections. However, cumulative health
spending beyond infrastructure is estimated to
total $68.1 trillion during that period,
indicating an enormous and largely untapped
market for private organisations to assist
governments to improve both the efficiency and
quality of their healthcare systems. Competition
for private capital has prompted governments in
Europe, Asia, Africa and southeast Asia to
establish PPP agencies, charged with developing
PPP policy recommendations, streamlining
procurement and contracting for services.
7
Partnerships like Spain’s Alzira project, which
includes hospital and primary care services,
have saved government 25% of the cost of
providing care. This project is based on a
strategic partnership between the government
of Valencia and a private company, Ribera Salud
Temporary Union of Businesses. It carries the
advantages of a decade-long track record that
illustrates the need for flexibility and ongoing
review. Since the €75 million Alzira hospital
opened, at least 20 other PPPs have been
completed in Spain. Central to the Alzira model
is the notion that “money follows the patient.”
Citizens of the region have the choice to visit
any hospital within the region, with their
catchment hospital being responsible for 100%
of the cost when that happens. Conversely,
when outside patients attend the Alzira hospital,
the operator only recovers 85% of that cost.
This is a strong incentive to provide high quality
services to maintain patient confidence. After
the hospital opened in 1999, officials soon
realized the need to collaborate with the
primary care sector to better coordinate and
integrate medical care throughout the district.
A second Alzira model was created in 2003 for
integrating primary care and hospital care.viii
In addition, the government initially agreed to
pay the hospital a capitated rate that increased
annually with general inflation. However,
medical costs were increasing at two to three
percentage points above the inflation rate.
Consequently, the contract was renegotiated so
that payment increased in line with the rate of
medical inflation.
Enclosed reading
Build and Beyond: the (R)evolution
of healthcare PPPs, PwC Health
Research Institute, December 2010
“SPAIN—Hospital de La Ribera,” PublicPrivate Investment Partnerships for Health:
An Atlas of Innovation. San Francisco: The
Global Health Group, Global Health Sciences,
University of California, San Francisco,
August 2010 (pp 41-45)
Questions
Are there segments of healthcare in which partnerships with private
organisations should not be considered? Why?
To what degree can PPPs influence a major cost driver: the salaries of
clinicians and other healthcare workers?
What types of private companies and/or investors should governments
seek as their partners in PPPs?
8
Case Study 2
The Power of Process and
“Reverse” Innovation:
India’s Narayana Hrudayalaya
Case Introduction
Dr. David Levy, Global Leader,
Healthcare, PwC
Case Presentation
Dr. Julius Punnen, Vice President
and Chief Cardiac Surgeon,
Narayana Hrudayalaya Hospital
By Western standards, Narayana Hrudayalaya
(NH) has done so much with so little. Pricing
cardiac surgery at a fraction of what it costs in
other countries, the health system has brought
treatment to the masses in India. In addition,
the system has gone way beyond this niche,
financing telemedicine, prevention, medical
and nursing education, and an insurance
scheme. Amid this array of accomplishments,
this case study will focus on how NH founder
Dr. Devi Shetty re-engineered heart surgery.
Dr. Shetty, who was also the personal physician
of the late Mother Teresa, founded the
Bangalore-based health system in 2001 through
what is referred to as reverse or “downward”
innovation. This term has been used by
technology manufacturers to describe how they
redesign expensive machines into simple ones
that cost a fraction of the price and can be sold
in mass quantities. It’s doing more for less, using
economies of scale to drastically reduce the cost
of production. This is also the philosophy
espoused in C.K. Prahalad’s book, “The Fortune
at the Bottom of the Pyramid,” a book that has
changed the way many businesses think about
marketing in emerging nations.
Through relentless process innovation, NH
conducts more than 10% of all cardiac surgery
(adult and pediatric) in India at higher
quality than virtually all U.S. hospital centers.
See Figure 1.ix
Yet, the costs of these surgeries makes jaws drop
in the United States: USD$2,000 for an open
heart surgery. The 1,000-bed hospital does this
through economies of scale, and that scale
continues to expand. Dr. Shetty is planning to
expand the NH network into a 30,000-bed
enterprise by FY2017, including opening a
9
Figure 1
Volume of CABG surgeries, Narayana Hrudayalaya and top U.S. cardiac hospitals
2,500
2,000
2,380
1,500
1,886
1,577
1,000
1,235
1,146
500
811
0
NH Bangalore
(2008)
NH Kolkata
(2008)
Mass General Hospital (2009)
Cleveland
Clinic (2009)
NYP
(2007)
Texas Heart
Institute (2009)
CABG observed mortality rates, Narayana Hrudayalaya and top U.S. cardiac hospitals
3
2.92
2
1
1.67
1.4
1.2
0
NH (2008)
Texas Heart
Institute (2009)
network of 55 low-cost, 300-bed heart hospitals.
NH also plans to accelerate the creation of a
major biocluster for innovation, research and
treatment in the Bangalore area. The case of
NH illustrates how healthcare can join other
sectors of the economy in constantly innovating
for cost reduction and quality improvement
simultaneously. With increasing cost pressures
felt in all developed economies, and expensive
hospital care as a focal point of cost reduction,
reverse innovation is a path worth considering.
Enclosed reading
Narayana Hryudayalaya Heart Hospital:
Cardiac Care for the Poor, Harvard Business
School, April 25, 2006
Johns Hopkins
(2008)
Cleveland Clinic
(2009)
Questions
If NH expanded into your market,
what are the first steps you would
take to compete?
Economies of scale at NH have spawned
super-specialisation of NH’s surgeons.
Can this be applied elsewhere?
NH is adept at cost-shifting by making
sure that revenue from paying patients
covers the costs of those who cannot
pay. Is this sustainable?
10
Case Study 3
Redefining Primary Care:
headspace, Australia’s
National Youth Mental
Health Foundation
Case Introduction
Dr. Christine Bennett, Past Chair of the
National Health and Hospitals Reform
Commission of Australia, Chief Medical
Officer, Bupa Asia Pacific
Case Presentation
Professor Ian Hickie, Professor of
Psychiatry, University of Sydney;
Executive Director, Brain and Mind
Research Institute
Patient engagement is vital to bending the cost
curve, yet it remains elusive regardless of
geography. A healthy system that revolves
around the needs of clinicians can bypass the
needs of patients, and put them on the outside
looking in. Patients are often unwilling to ask
for help, or wait until their condition becomes
critical and even more costly.
Perhaps the best example of this is young people
in need of mental health. While this case
study focuses on this particular population’s
reluctance to seek medical treatment, the
lessons it provides in multidisciplinary design of
care are applicable to all segments of prevention
and primary care. This example also points to
the need to customise services to populations.
For example, the experience of elderly patients
in Australia seeking mental health was far
different than young people.
11
Research in Australia found deficiencies in the
traditional care model in which patients seek
mental health treatment initially through their
general practitioner (GPs). What the
government determined was that the existing
healthcare infrastructure did not provide easy
access to timely treatment. Patients were
reluctant to go, and GPs were reluctant to refer
patients to the broad range of mental health
experts and resources. So, in 2006, the
Australian government launched headspace, a
program that provides collaborative support for
mental health to Australia’s youth (ages 12 to
25) and their families through 30 centers.x
The goal was to reach young people early—the
key to resolving mental health problems quickly,
before they lead to problems such as substance
abuse and even suicide.
Questions
When patients are reluctant to seek
help, how much responsibility does the
health system have to seek them out?
How can medicine move away from the
traditional referral processes?
Could this model result in
overutilisation, and how could
that be avoided?
While the main focus of the foundation is on
mental health, headspace offers a range of other
services to promote the general wellbeing of
Australia’s youth, from educational offerings
and employment to services designed to combat
alcohol and drug dependency. To ensure that
headspace programs are based on knowledge of
what treatments succeed, the foundation’s
Centre of Excellence is conducting a systematic
review of the evidence related to interventions
for mental health and substance abuse in youth,
both in Australia and internationally.
Enclosed reading
“Delivering youth-specific mental health
services: the advantages of a collaborative,
multi-disciplinary system,” Australasian
Psychiatry, March 18, 2009
12
Case Study 4
Adapting to an Evolving
Regulatory Environment:
The Dutch Healthcare
Authority
Case Introduction
Professor Jan Willem Velthuijsen,
Healthcare Leader, PwC Netherlands
Case Presentation
Mr. Theo Langejan, Chairman, NZa,
(Dutch Healthcare Authority)
Health reform needs constant care. While
politicians may grow weary of health reform
discussions, the industry and patients benefit
when health reform is an iterative process.
Regulating and legislating the provision of care
and cure must accommodate changes in the
economy, technology, patient behaviours, and
demographics. Handling this change is difficult,
but not impossible. A prime example of this
evolution in healthcare regulation is in the
Netherlands. A major health reform law was
passed in 2004, and its implementation
continues to evolve.
Implementation of the law began in 2006 with
an emphasis on injecting competition in the
market in the following ways:
• Citizens must purchase health insurance from
the private insurers. In addition, they can
change insurers every year if they wanted.
• Health insurance companies will compete
for members.
• Health insurance companies can
negotiate rates from public and private
providers, prompting them to be more
effective and efficient.
13
Questions
How do you measure success—cost reduction and/or quality improvement mix?
Under what conditions is competition a good way to impose cost reduction incentives?
How can a regulator balance the need for flexibility to intervene and correct versus
the steadiness needed to encourage entrepreneurship?
The law is viewed as a liberalisation effort in
that it forced insurance companies and
providers into a market economy. The premise
was that competition would drive up quality
and efficiency and drive down prices. Previously,
the Dutch health system had been centrally
regulated in which the government set all prices
paid to providers.
The model continues to evolve as government
and the industry assess whether it is lowering
costs, increase quality and gaining the trust of
its citizens. The prior system was characterized
by long waiting lists for procedures and
diminishing quality of services.
As the new model evolves, the market has
reacted in innovative ways. For example,
dermatology practices have opened ambulatory
clinics, thus reducing the number of patients
admitted for skin conditions.
Currently, about one-third of prices to providers
have been deregulated, and eventually, as much
as 70% of prices will be deregulated. This
means that insurers no longer have to pay a
government-regulated rate for a service; they
Enclosed reading
can decide what they want to pay, depending on “A Living Model of Managed Competition: A
a provider’s quality and cost efficiency.
Conversation with Dutch Health Minister Ab
Klink,” Health Affairs, April 8, 2008
14
Case Study 5
Cost Effectiveness: Britain’s
National Institute for Health
and Clinical Excellence (NICE)
Case Introduction
Rt. Hon. Alan Milburn, Former Secretary of
State for Health with the British Labour Party
Case Presentation
Sir Michael Rawlins, Chairman of the National
Institute for Health and Clinical Excellence
Healthcare is not synonymous with costeffectiveness. Yet, any discussion of bending
the cost curve must attempt to address the
cost-benefit ratio. Since 1999, Britain has used
NICE for economic modeling of the cost
effectiveness of new treatments. Critics of
NICE have been vocal, contending the agency
inhibits innovation and access by British
citizens to new expensive, but valuable drugs.
Indeed, the country’s new coalition government
recently floated a proposal to curtail NICE’s
power, saying that it could advise doctors on
the best approaches, but not hinder them from
prescribing certain drugs.xi
15
In the U.S., NICE has been a flashpoint in a
dialogue about controlling costs. Critics contend
that exporting NICE’s brand of cost control will
result in rationing. While everyone agrees with
the need to control costs, NICE’s explicit mission
to weigh cost against benefit engenders debate.
For example, NICE decisions are based in part
on quality-adjusted life year (QALY) gained by a
specific technology or device. While there is not
a specific threshold, NICE uses a range that puts
a price point on what breakthroughs doctors
can prescribe.
However, because NICE doesn’t take into
consideration the impact of its decisions on the
NHS’ budget, it has also been accused of
contributing to cost growth. This case study
represents the best example to explore NICE’s
track record and how it fits in today’s
environment, in which drug spending growth
has slowed considerably from when the agency
was founded.
Enclosed reading
“Quality, Innovation, and Value for Money:
NICE and the British National Health Service,”
Journal of the American Medical Association,
November 23-30, 2005
Questions
Are governments better at controlling
costs than markets?
Can the NICE model be applied to
clinical processes?
With the drop in drug spending
growth, should the resources spent
on reviewing new drugs be shifted
to other cost drivers?
i
United Nations, “Population Ageing and Development 2009.”
ii
Centers for Disease Control and Prevention and The Merck Company Foundation, “The State
of Aging and Health in America 2007.” Whitehouse Station, NJ: The Merck Company
Foundation; 2007. Available at www.cdc.gov/aging and www.merck.com/cr. An interactive
version of The State of Aging and Health in America 2007 report is available online at
www.cdc.gov/aging
iii
Ibid.
iv
Centers for Disease Control and Prevention, “Chronic Diseases: The Power to Prevent,
The Call to Control: At A Glance 2009” Available at
www.cdc.gov/chronicdisease/resources/publications/AAG/chronic.htm
v
“Health: Improving healthcare is vital for long-term growth,”
OECD Observer No. 281, October 2010. Available at
www.oecd.org/document/54/0,3343,en_21571361_44315115_46155446_1_1_1_1,00.html
vi
World Health Organization, “World Health Statistics 2008”
vii
By 2010, India will have maximum number of diabetics, Times of India, Oct. 21, 2009
viii
Build and Beyond: the (R)evolution of healthcare PPPs, PwC Health Research Institute,
December 2010
ix
Massachusetts General: Massachusetts Office of Health and Human Services: www.mass.gov/
?pageID=eohhs2terminal&L=4&L0=Home&L1=Government&L2=Special+Commissions+a
nd+Initiatives&L3=Health+Care+Quality+and+Cost+Information&sid=Eeohhs2&b=termi
nalcontent&f=dhcfp_quality_cost_archives_qc3_reports&csid=Eeohhs2#heart_surg
Cleveland Clinic: Heart and Vascular Institute “Outcomes 2009.” http://my.clevelandclinic.
org/Documents/outcomes/2009/hvi-2009-outcomes.pdf
NYP: New York State Department of Health. “Adult Cardiac Surgery in New York State.”
Revised 2010. www.health.state.ny.us/statistics/diseases/cardiovascular/heart_disease/
docs/2006-2008_adult_cardiac_surgery.pdf
Texas Heart Institute: Texas Department of State Health Services:
www.dshs.state.tx.us/thcic/DataAndReports.shtm
Johns Hopkins: Johns Hopkins University HealthSystem* Consortium Mortality Statistics:
www.hopkinsmedicine.org/quality/performance/mortality/uhc.html#cardiology
x
This overview is adapted from information found on the headspace website,
www.headspace.org.au
xi
U.K. Drug Watchdog to Lose Industry Power, Wall Street Journal, Nov. 2, 2010
Bending the
Cost Curve
February 1–2, 2011
Agenda
February 1, 2011
Daughters of the American Revolution Hall (DAR)
17th & C Street, NW, Washington, DC
6:00pm
Shuttle service begins
Shuttles depart from Ritz-Carlton Hotel for DAR as needed until 7:00pm
6:30-7:30pm
Cocktail reception
7:30-9:30pm
Dinner
Keynote address by Kathleen Sebelius,
Secretary of Health and Human Services
February 2, 2011
The Ritz Carlton Hotel, Plaza Ballroom
1150 22nd Street, Washington, DC
7:30-8:00am
Registration and Continental Breakfast
The Roosevelt Room
8:00-8:15am
Opening remarks
8:15-9:45am
Session 1
Managing Rising Costs in a Fiscally Constrained World:
The Role of Public-Private Collaboration
Introduction by Sir Richard Feachem, Executive Director, UCSF Global Health
Sciences and Professor of Global Health, University of California San Francisco
and University of California Berkeley
Case Study: The Valencia Concessional Model: A PPP Example in Spain
9:45-11:15am
Session 2
The Power of Process and “Reverse” Innovation
Introduction by Dr. David Levy, Global Leader, Healthcare, PwC
Case Study: Narayana Hrudayalaya, Bangalore, India
Comments by Dr. Julius Punnen, Vice President and Chief Cardiac Surgeon,
Narayana Hrudayalaya Hospital
11:15-12:45pm Session 3
Redefining Primary Care and Wellness
Introduction by Dr. Christine Bennett, Past Chair of the National Health and
Hospitals Reform Commission of Australia; Chief Medical Officer, Bupa Asia Pacific
Case Study: headspace: Australia’s Youth Mental Health Foundation
Comments by Professor Ian Hickie, Professor of Psychiatry,
University of Sydney; Executive Director, Brian and Mind Research Institute
12:45-1:30pm
Networking lunch
The Roosevelt Room
1:30-3:00pm
Session 4
Healthcare Costs and Privatisation
Introduction by Prof. Jan Willem Velthuijsen, Healthcare Leader, PwC Netherlands
Case Study: Dutch Healthcare Authority
Comments by Mr. Theo Langejan, Chairman, NZa (Dutch Healthcare Authority)
3:00-4:30pm
Session 5
Comparative Effectiveness: Change Accelerator or Barrier?
Introduction by Rt. Hon. Alan Milburn, Former Secretary of State for Health
with the British Labour Party
Case Study: Cost Effectiveness: Britain’s National Institute for Health and
Clinical Excellence (NICE)
Comments by Sir Michael Rawlins, Chairman of the National Institute for
Health and Clinical Excellence
4:30-5:00pm
Closing
Roster of
Participants
as of January 21, 2011
Dr. Christine Bennett
Past Chair of the National Health and Hospitals
Reform Commission of Australia; Chief Medical
Officer, Bupa Asia Pacific
Mr. Stephen Berger
Chairman of the New York State Commission
on Health Care Facilities in the 21st Century;
Chairman, Odyssey Investment Partners, LLC
Ms. Muna Bhanji
Senior Vice President, Global Market Access,
Merck
Dr. Yves Bolduc
Minister of Health and Social Services of
Quebec, Canada
Mr. Mike Boswood
President and CEO, Healthcare and Science,
Thomson Reuters
Dr. Fred Cerise
Former Secretary of Health, Louisiana;
Vice President for Health Affairs and Medical
Education, Louisiana State University
Dr. Jon Cohen
Chief Medical Officer and Senior Vice President,
Quest Diagnostics
Dr. Philippe Couillard
Former Minister for Health and Social Services
of Quebec, Canada; Consultant, SECOR;
Partner, Persistence Capital Partners; and
Senior Fellow in Health Law, McGill University,
Montreal, Canada
Ms. Janet Davidson
President and CEO, Trillium Health Centre,
Ontario, Canada
Mr. Michael Dowling
President and CEO, North Shore Long Island
Jewish Health System
Lady Neelam Sekhri Feachem
CEO, Healthcare Redesign Group
Sir Richard Feachem
Executive Director, UCSF Global Health
Sciences and Professor of Global Health,
University of California San Francisco and
University of California Berkeley
Magdalena Sofía Frech López
Coordinator of Special Projects, Office of the
President of Mexico
Professor Ian Hickie
Professor of Psychiatry, University of Sydney;
Executive Director, Brain and Mind Research
Institute
Mr. Theo Langejan
Chairman, NZa (Dutch Healthcare Authority),
Netherlands Dr. Richard Levin
Dean of the Faculty of Medicine, McGill
University, Montreal, Canada
Dr. David L. Levy
Global Leader, Healthcare, PwC
The Right Honourable Alan Milburn
Former Secretary of State for Health,
British Labour Party
Mr. John Rother
Executive Vice President of Policy, Strategy and
International Affairs, AARP
Dr. Surya N. Mohapatra
Chairman and CEO, Quest Diagnostics
Dr. Steven Shapiro
Chief Medical and Scientific Officer, UPMC
Ms. Peggy O’Kane
President, National Committee for Quality
Assurance
Dr. Michael Stocker
Chairman, New York City Health and Hospitals
Corporation, New York
Ms. Robin Osborn
Vice President and Director, International
Program in Health Policy and Innovation, The
Commonwealth Fund
Mr. Robert Valletta
U.S. Healthcare Providers Leader, PwC
Dr. Julius Punnen
Vice President and Chief Cardiac Surgeon,
Narayana Hrudayalaya Hospital, Bangalore,
India
Professor Jan Willem Velthuijsen
Healthcare Leader, PwC Netherlands
Dr. Gabriela Villarreal Levy
General Director of National Healthcare
Information, Federal Healthcare Ministry,
Mexico
Mr. Saäd Rafi
Deputy Minister of Health and Long-Term Care,
Ontario Government, Canada
Mr. Gregory Wasson
President and CEO, Walgreen Co.
Ms. Carol Raphael
President and CEO, Visiting Nurse Service of
New York
Ms. Paula Wilson
President and CEO, Joint Commission
Resources (JCR)
Sir Michael Rawlins
Chairman of the National Institute for Health
and Clinical Excellence, United Kingdom
Mr. Ronald Zwanziger
Chairman, CEO and President, Alere Inc.
Enclosed reading
Synopses
Build and Beyond: the (R)evolution of healthcare PPPs
PwC Health Research Institute, December 2010
This report, published in December 2010 by PwC’s Health Research Institute, is a comprehensive
look at how health PPPs are evolving from infrastructure to clinical services. The report includes
the Alzira case study as well as examples in Switzerland, South Africa, Japan, China, the Middle
East, Latin America and the U.S..
Key finidings in the study
• Public and private sector partnerships are emerging as a new and compelling model for
financing and managing healthcare delivery.
• Public-private partnership can relieve the burden on taxpayers by ultimately making the health
system more efficient and accountable for improved health outcomes and wellness.
• Health PPPs have the potential to create a multi-trillion global market for private companies
across multiples industries inside and outside of healthcare.
Narayana Hryudayalaya Heart Hospital: Cardiac Care for the Poor
Harvard Business School, April 25, 2006
This article provides an in-depth look at why and how Dr. Shetty provides affordable cardiac care
in the world’s second most populous country. On one of the walls of his office is this quote: “Most of
the things worth doing in the world had been declared impossible before they were done.”
Key findings in this article
• The system’s goal is the highest quality at the lowest price.
• Costs are driven lower through high capacity utilisation, high productivity goals, negotiating
price discounts from vendors, and using information technology to drive efficiencies.
• The hospital offered an insurance scheme, called Karuna Hrudaya, that allows poor patients to
pay less. Or, there is a charitable organisation that arrange funds for patients as well.
“Delivering youth-specific mental health services: the advantages of a
collaborative, multi-disciplinary system,” Australasian Psychiatry, March 18, 2009
This article describes the research that provided the foundation for developing more effective
mental health services for Australia’s youth.
Key findings in this article
• Traditional mental health services have responded poorly to the needs of young people.
• 75% of major mental disorders develop before the age of 25.
• In the headspace clinics, young people had access to a much more diverse range of professionals.
“A Living Model of Managed Competition: A Conversation with Dutch Health
Minister Ab Klink,” Health Affairs, April 8, 2008
The interviewer for this article is Alain Enthoven, a professor emeritus at the Stanford University
Graduate School of Business. Enthoven has been regarded as the father of “managed competition,”
a concept of that was the basis of health reform proposed during the Clinton administration.
Key findings in this article
• During the late 1990s, the Dutch economy was soaring, and a shortage of clinical workers was
threatening to push costs higher and higher. The government was worried about being able to
control costs.
• The political climate benefitted from two big parties that were willing to move to the centre on
health policy issues: “It’s important to have centrist parties that are aware that they didn’t exist
just to win elections, but also have to solve problems in society.”
• Efficiencies are driven by increased collaboration among hospitals and physicians because they
are paid a global payment, called a diagnosis treatment combination (DTC) Health IT also
enhances this collaboration as physicians are required to use electronic health records and that
information is shared among clinicians.
“Quality, Innovation, and Value for Money: NICE and the British National
Health Service,” Journal of the American Medical Association, November 23-30, 2005
This article explores the pros and cons of NICE, both in the context of the British NHS as well
as how it could be adapted to the United States. While NICE is best known for ruling the cost
effectiveness of new drugs, its mission is much broader: The institute has 4 distinct programs:
(1) appraisals of individual or classes of health technologies (eg, pharmaceuticals, devices,
procedures, diagnostic methods), taking account of both their clinical effectiveness and costeffectiveness; (2) development of clinical guidelines, involving considerations of both clinical
effectiveness and cost-effectiveness, for management of individual conditions or symptoms;
(3) guidance on the safety and efficacy of interventional procedures (both diagnostic and
therapeutic), and (4) public health guidance including advice on the clinical effectiveness and
cost-effectiveness of single interventions.
Key findings in this article
• Mandatory funding of NICE technology appraisals helps to foster innovation.
• NICE is viewed as independent in that its governing board is appointed by an independent
appointments commission.
• NICE is one of several NHS initiatives to set national standards.
Contacts
If you have any questions or additional considerations
for our discussion in Washington, DC, please do not
hesitate to contact us
David L. Levy, MD
Global Leader, Healthcare, PwC
+1 201 646 471 1070
[email protected]
Christine Walters
Global Marketing Director, Healthcare, PwC
+1 416 941 8262
[email protected]
Silvia Fracchia
Global Marketing Manager, Healthcare, PwC
+1 917 912 0101
[email protected]
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