1. Healthcare 2015: Win-Win or Lose-Lose? A portrait and a path to successful transformation Presented by Sal P. Causi, P. Eng. Business Development Executive - Healthcare March 12th, 2009

5. Drivers, Challenges – “the Perfect Storm” is brewing Healthcare 2015 | Jun 8, 2009 Productivity Quality of Care “ Baker Norton & IOM” – Preventable adverse events, redundant testing, nosicomal infections BC Treasury estimates “Health” will take 71% of public dollars in 10 yrs Waiting & Access Healthcare Transformation Imperative An Ageing workforce plagued by paper intensive, ad hoc processes - Recruitment, Retention, Retraining Multiple co-morbidities – +60% of costs, +70% of ED Visits, 80% of 60+ residents, lifestyle influenced Chronic Disease

7. Health care threatens to consume large percentages of the overall provincial revenues – e.g. Nova Scotia Healthcare 2015 | Jun 8, 2009 Assumptions: Health Grows at 9% per annum All other Dept.'s receive proportionate share of remaining revenues in years 1-4 In year 4 when Health consumes all revenue growth, all other departments' budgets permanently frozen In year 4 when Health consumes all revenue growth, initial revenue deficits applied to restructuring fund 1st Healthcare in Crisis: Win-Win or Lose-Lose Transformation?

8. Provincial / Territorial health expenditures have continued to rise from 1975-2007 Healthcare 2015 | Jun 8, 2009 Source: Canadian Institute for Health Information. Healthcare in Crisis: Win-Win or Lose-Lose Transformation?

9. Total Health Expenditure as a Proportion of GDP, 2006 Healthcare 2015 | Jun 8, 2009 Y.K.: 13.3% N.W.T: 7.6% Nun.: 27.5% Source: Canadian Institute for Health Information. Healthcare in Crisis: Win-Win or Lose-Lose Transformation?

11. Five drivers make healthcare fundamentally different from the past Healthcare 2015 | Jun 8, 2009

12. Healthcare 2015 | Jun 8, 2009

13. Counterbalancing the drivers for change are key inhibitors that threaten to maintain the healthcare status quo Healthcare 2015 | Jun 8, 2009

14. In 2015, countries will find themselves in one of four scenarios based on how they address the drivers and overcome the inhibitors Healthcare 2015 | Jun 8, 2009 Healthcare in Crisis: Win-Win or Lose-Lose Transformation?

18. Transforming Value Healthcare 2015 | Jun 8, 2009

19. Perspectives on value from the healthcare system differ among stakeholders but must be balanced and reconciled for a win-win Healthcare 2015 | Jun 8, 2009 Consumers Society Payers Provider Incentives Financial incentives to treat and to do more, not to prevent Wellness and prevention High quality, cost-effective acute & chronic care Fix me regardless of cost or cause Healthcare is a societal right Today Minimize unit costs and shift costs Future Help keep me well Provide appropriate, cost-effective, high quality care when needed Transparent cost/quality information Able to accept value-based reimbursement Healthcare is a societal right – but available funds must be prioritized well across the hierarchy of needs Value Based Transformation Supply Demand Transforming Value

20. Healthcare systems must balance and resolve these differences by establishing and addressing the needs of stakeholders Healthcare 2015 | Jun 8, 2009 Market Service Societal Rights Finite Needs Transforming Value Hierarchy of Healthcare Needs Model Funding Gap Virtually Infinite Needs

21. Transforming Patient Responsibility Healthcare 2015 | Jun 8, 2009

23. Transforming Care Delivery Healthcare 2015 | Jun 8, 2009

25. In 2007 in the developed world, healthcare services are typically acute and provided locally by physicians in outpatient and hospital settings Healthcare 2015 | Jun 8, 2009 Transforming Care Delivery Patients Care Delivery Age Group Setting Socio- economic Status Access Location Provider Service Infants Adolescent Adult Men Adult Women Senior Men Senior Women Rural Suburban Urban High Medium Low In Person Telephonic Electronic Home Outpatient Setting Hospital Emergency Department Long Term Care Internet Call Center Risk Assessment Prevention Acute - Diagnosis Acute - Treatment Chronic - Diagnosis Chronic - Treatment Traditional Providers Public/Private Insurers Alternate Providers Midlevel Provider Health Infomediary Catchment Area Local Regional National International

26. By 2015, payers, providers, and suppliers will focus more on market segmentation and channel management Healthcare 2015 | Jun 8, 2009 Care Delivery Patients Health Status Setting Socio- economic Status Catchment Area Access Location Service Provider Transforming Care Delivery Consumers Will Seek Out More Healthcare Delivery Channels Healthy Minor Ailments At Risk Acutely Ill Chronically Ill Catastrophic-ally Ill Rural Suburban Urban High Medium Low In Person Telephonic Electronic Home Outpatient Setting Hospital Emergency Department Long Term Care Internet Call Center Wellness Risk Assessment Prevention Acute Care Chronic Care Complement-ary Care Traditional Providers Public/Private Insurers Alternate Providers Midlevel Provider Health Infomediary Local Regional National International

27. New healthcare business models are emerging to fill the cost, quality, convenience and access gap Healthcare 2015 | Jun 8, 2009 Wellness Centers Acute Care Wellness/ Prevention Chronic Care Ambulatory ICUs Centers of Excellence Medical Tourism Telemedicine Retail Clinics Concierge Medicine Ambulatory Surgery Centers Medical Home Analysis >> New healthcare requirements, delivery models, capabilities, and reimbursement Specialty Hospitals

28. Medical tourism is beginning to subject healthcare delivery to global competitive pressures Healthcare 2015 | Jun 8, 2009 Source: PlanetHospital Note: Prices do not account for travel or accommodations costs. Expenses can also increase if there are complications with the procedure. United States rates reflect Medicare reimbursements for hospital services but not for medications or anesthesia. Transforming Care Delivery Procedure United States Mexico Costa Rica India Thailand Singapore Angioplasty $33,000 $13,125 $14,500 $7,800 $9,200 $12,500 Heart bypass $37,000 $14,400 $13,600 $6,650 $11,000 $13,500 Hip replacement $45,000 $9,400 $13,000 $6,500 $8,000 $9,000 Knee replacement $21,000 $10,500 $9,500 $6,500 $8,500 $10,000 Laparoscopic hysterectomy $19,000 $4,275 $6,500 $2,238 $4,500 $4,500 Laparoscopic prostatectomy $27,500 $16,800 $11,500 $5,900 $9,500 $16,000

29. Since the late 90’s, we have worked with customers to advance IT to support transformation. Healthcare 2015 | Jun 8, 2009 Quebec Provincial EMPI Implementation Drug Info System: e-scripts Mother-Child Network (20 sites) Laval EHR (11 sites) Blood Management Network (88 sites) Ontario Trillium Project Office & Help Desk Trillium Provider & Consumer Portal St Michael’s Hospital Alliance KGH & St T. Elgin Wireless Nurse Call MOH EMPI & DI/PACS Strategy SSHA Change Mgt National Paediatric Wait Time System CAMH Strategic Outsource The Ottawa Hospital Clinical Portal LHIN 4 IT Strategy TEN DI PACS Infrastructure Child Health Network (50+ sites) British Columbia Chronic Disease Toolkit Pan-Cdn Public Health Health Data Warehouse Fraser DI/PACS Fraser Emergency Dept Process “Gold Standard” Manitoba WRHA DI PACS Infrastructure Health Surveillance Network Alberta Provincial EHR (Orion) Deployment Drug Info System: e-scripts Hip & Knee Process Re-design Calgary Clinical Implementation Calgary Strategic Outsource New Brunswick DI/PACS Strategy DI/PACS Infrastructure Federal Healthcare 2015 e-Therapeutic Portal Saskatchewan Saskatoon Primary Care Governance Health Security Architecture Drug Information System: e-scripts

33. Care delivery organizations (e.g. health regions) must envision the future healthcare environment and transform Healthcare 2015 | Jun 8, 2009 Implications and Recommendations Factor From (typical of today’s healthcare) To (to successfully transform) Accountability Safety, quality but with few incentives or penalties, focus on removing “bad apples” Value, evidence-based standardized processes, outcomes, access Incentives Mostly financial to maximize reimbursement Outcomes, follow evidence-base standards, patient satisfaction Information Management Predominantly paper-based, fragmented Electronic, interoperable, accessible, secure and private, real time decision support at the point of care Innovation New medical technologies, research in academic medical centers Keeping people healthy; improving overall value and quality of care; better coordination of care; more rapid adoption of best practices and methods Basis for Competition Geographic coverage, reputation, broad array of services, new technologies Differentiated value (cost, quality, access); specialized; channels/sites closer to the patient Focus of System Acute, reactive, episodic Predictive, preventive, chronic; life-long, coordinated management; personalized

37. This Transformation requires substantial change in Process, People and IT. Healthcare 2015 | Jun 8, 2009 Background Productivity Waiting & Access Quality & Safety Chronic Disease Mgt. Value Realization Physician/Clinician Integration Technology Fusion Workforce Transformation Clinical & Business Process Optimization Value Realization Physician/Clinician Integration Technology Fusion Workforce Transformation Clinical & Business Process Optimization Common Elements/Underlying Principles Governance & PMO Infrastructure Clinical Care Supported by Technology; People, Process and Product Knowledge

38. Healthcare 2015 | Jun 8, 2009

39. As well as IBM’s focus on Life Sciences Healthcare 2015 | Jun 8, 2009