RHODE ISLAND Coordinated HOSPITAL VOLUME Health Planning Council TRENDS July 19, 2012 AG E N DA

(1) Demand: Inpatient & Outpatient

(2) Supply: Inpatient & Outpatient

(3) Impact of Supply and Demand Trends

7/19/2012 Rhode Island Coordinated Health Planning Council 2 Data Sources

This presentation uses information from several data sources to test the strength and direction of regional, statewide, and service area trends.

Kaiser State Health Facts via the America Hospital Association Regional data for patient days, admissions, lengths of stay, ER visits, and outpatient visits

Booz & Company Analysis via Lifespan Hospital Corporation, BCBSRI Select Rhode Island statewide data 2000 -2010, analysis of future trends

Hospital Discharge Database Service line and statewide data 2007-2011

Hospital Association of Rhode Island Staffing, occupancy, and bed data 7/19/2012 Rhode Island Coordinated Health Planning Council 3

Rhode Island’s hospital care supply may be greater than its current and future hospital care needs.

Rhode Island’s population is falling

Hospital inpatient volume is falling Hospital outpatient volume is rising Hospital IP volume per person is falling Hospital OP volume per person is rising Hospital occupancy is falling Number of freestanding OP sites is rising Hospital beds per person are rising Staffing ratios are above the US average

7/19/2012 Rhode Island Coordinated Health Planning Council 4 Rhode Island’s population is Rhode Island’s declining from its 2003 peak population increased less than one third of one Rhode Island and United States Population | 2000-2011 percent, or by 2,981 people, between 2000 and 2011 1,071,504 US Population +7.4%, 2003-2011 311,591,900 In contrast, total US population increased by 10.5% 282,162,400 during the same time. 1,051,300 1,048,319 RI Population -1.9%, 2003-2011 This lack of growth affects future 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 healthcare demand and infrastructure

Data Sources: 2000 and 2010: US Census Actuals by State; Annual Estimate of the Resident Population by Selected Age Groups and needs. Counties in RI April 1, 2000 to July 1, 2011. Release date: May, 2012 | Slide prepared by Booz & Company and provided by Lifespan Hospital Corporation and Blue Cross Blue Shield of Rhode Island 7/19/2012 Rhode Island Coordinated Health Planning Council 5 Regional, VOLUME (DEMAND) Statewide, and H O S P I TA L Service Line INPATIENT & OUTPATIENT Analyses

7/19/2012 Rhode Island Coordinated Health Planning Council 6 Rhode Island inpatient admissions per resident are both declining and higher than benchmarks

Admissions per 1,000 People PERCENT FY00 through FY10 CHANGE, 140 FY00-FY11 130 127 126 Massachusetts 120 120 118 117 Rhode Island 114 United States

110 Connecticut 114

Admissions 105 100

US: -5.0% 90 RI: -7.9% 80 83

79 Vermont Admissions Admissions per 1,000 70 MA: +6.8% CT: +8.6% 60 VT: -4.8% 50

40 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 Source: Kaiser State Health Facts via the American Hospital Association Annual Survey 7/19/2012 Rhode Island Coordinated Health Planning Council 7 Rhode Island inpatient days per resident are both declining and higher than benchmarks

Days per 1,000 People | FY00 through FY10 PERCENT CHANGE, 750

696 FY00-FY11 700 682 674

650 640 Connecticut Patient Days 635 Massachusetts 620 613 United States 600 596 590 Rhode Island US: -10.1% RI: -1.0% 550

Days Days per 1,000Residents 500 MA: -5.8% 488 Vermont

CT: +3.2% 450 VT: -29.9% 400 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10

Source: Kaiser State Health Facts via the American Hospital Association Annual Survey 7/19/2012 Rhode Island Coordinated Health Planning Council 8 Statewide inpatient volume is falling Total inpatient days and discharges peaked in 2007

Total Patient Days and Discharges, All Rhode Island Hospitals FY00 through FY11

690,000 680,033 135,000 679,264 Discharges 677,741 675,434 Patient Days 130,000 660,000 655,518 647,977

643,470 643,125

633,841 125,000

630,197

630,000 621,303

613,343

120,000 Discharges

Patient Days Patient

130,336 130,336

129,455 129,455

128,571 128,571

127,841 127,841

127,021 127,021

126,426 126,426

600,000 125,519

123,439 123,439 123,156 123,156

115,000

122,519 122,519

Between 2007 and 2011,

119,934 119,934

118,751 118,751

• Discharges fell 5.3% • Inpatient days fell 8.7% 570,000 110,000 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

Data Sources: 2000-2011 Hospital Discharge Database, Rhode Island Department of Health Slide elements prepared by Booz & Company for Lifespan Hospital Corporation and Blue Cross Blue Shield of Rhode Island 7/19/2012 Rhode Island Coordinated Health Planning Council 9 Average Length of Stay (ALOS) is Falling Across the Region

The average length of stay (ALOS) declined in Average Length of Stay all three states shown at FY00 through FY10 the left. ALOS may fall 5.40 for several reasons, including rising hospitals 5.30 efficiency and reduced 5.20 5.16 patients acuity. 5.10 5.09 Shorter hospital stays 5.07 5.00 5.01 Rhode Island may reduce occupancy 4.96 Massachusetts and lower total hospital 4.90 4.9 demand. 4.80 4.8 United States % Change FY00 – FY10 Rhode Island’s ALOS, 4.70 4.72 Connecticut however, is the highest Rhode Island -3.0% of the three states and 4.60 Massachusetts -2.6% Connecticut -6.9% declined slower than 4.50 Connecticut over the United States (FY00-FY09) -2.0% ten year period. Based 4.40 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 on regional trends, Data excludes Psychiatric, Rehabilitation, and Veteran’s hospitals as well as normal newborns Data Sources: Market Data from Thompson Reuters (MA, CT, RI 2000-2006), Rhode Island Hospital Discharge Database (2007-2010); Kaiser State Health Facts (US) further declines in are Slide elements prepared by Booz & Company for Lifespan Hospital Corporation and Blue Cross Blue Shield of Rhode Island expected. 7/19/2012 Rhode Island Coordinated Health Planning Council 10 Inpatient Volume per Resident is Falling Faster than Total Volume PERCENT Patient Days and Discharges Per 1,000 Rhode Island Residents FY07 through FY11 CHANGE, 700 134 133 FY07-FY11 Patient Days per 1,000 132 132 680 686 Patient Days:

130

Gross: -8.7% 672 Discharges per 1,000 130 660 Per 1,000: -9.7%

656 128 127 640 Discharges: 637 125 126 Gross: -5.3% 620

124 Residents 1,000 per Discharges Per 1,000: -5.8% Patient Days Per 1,000 Residents 1,000 Per Days Patient 619

600 122

580 120 2007 2008 2009 2010 2011

Data Sources: 2007-2011 Hospital Discharge Database, Rhode Island Department of Health 7/19/2012 Rhode Island Coordinated Health Planning Council 11 In 2011, RI hospitals saw 75,658 fewer patient days than in 2007 CHANGE IN Change in Patient Days by Service Area FY07-FY11 PATIENT DAYS, FY07-FY11

3,053 Total Change

Surger y -26k

(2,404) Orthopedics -12k (7,993) (9,550) (9,333) (12,457) (10,848) Psychiatry -11k

Med/Cardio +3k

(26,126)

Medicine Cardio /

Percent Change TOTAL Rehab -56% Urology -48% Orthopedics -25%

(75,658) Med/Cardio +13%

Data Sources: 2007-2011 Hospital Discharge Database, Rhode Island Department of Health “Other” includes: Abortion, ENT, Note: Due to differences in coding practices, several services areas were included in the 2007 data set only. The largest of these was “cardiology” at 26,599 days. Because cardiology cases were likely classified as “Medicine” in later years, this analysis groups the categories together. Gynecology, Newborn, OB not delivered, Ophthalmology, Oral Surgery, and 7/19/2012 Rhode Island Coordinated Health Planning Council Pediatrics 12 Hospital outpatient volume per person is rising

OP Visits per 1,000 People | FY00 through FY10 PERCENT CHANGE, 6,000 FY07-FY11 5,356 Vermont 5,000

Outpatient 4,000

Visits 3,317 Massachusetts 3,000 2,627 2,491 Rhode Island US: +14.0% 1,981 2,311 Connecticut 2,000 2,106 United States RI: +25.7% 1,848

MA: +26.3% 1,000 CT: +16.7% - VT: +162.8% FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 Source: Kaiser State Health Facts via the American Hospital Association Rhode Island Coordinated Health Planning Council 7/19/2012 13 Hospital outpatient volume per person is rising

ER Visits per 1,000 People | FY00 through FY10 PERCENT CHANGE, 600 FY07-FY11 564 Vermont 550

ER Visits 500 481 Massachusetts 470 Rhode Island 464 Connecticut US: +12.3% 450 427 RI: +12.2% 419 411 United States 400 388 387 MA: 12.6% 366 CT: +19.6% 350 VT: +45.7% 300 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 Source: Kaiser State Health Facts via the American Hospital Association Rhode Island Coordinated Health Planning Council 7/19/2012 14 Regional, SUPPLY Statewide, and Service Line INPATIENT & OUTPATIENT Analyses

7/19/2012 Rhode Island Coordinated Health Planning Council 15 While inpatient demand per resident decreased, staffed beds per 1,000 increased

Staffed Beds per 1,000 People PERCENT FY00 through FY10 3.1 CHANGE, 3.0

FY00-FY11 2.9

2.7 2.7 Staffed Beds 2.6 2.6 United States 2.5 Rhode Island per 1,000 2.4 Massachusetts 2.3 2.3 2.3 Connecticut

US: -13.3% 2.1 2.1 Vermont RI: +4.3% 1.9

MA: -7.7% 1.7 CT: -0.0% 1.5 VT: -22.2% FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 Source: Kaiser State Health Facts via the American Hospital Association 7/19/2012 Rhode Island Coordinated Health Planning Council 16 RI, New England have higher staffing ratios than the national average

Rhode Island’s ratio of Nursing FTE per Staffed Bed and Nursing Average Hourly Wages, FY10 nursing full time equivalents (FTEs) to Nurse FTEs per Bed beds, across all hospitals, 3.50 Average Hourly Wages (Nurses) $45 is higher than the $39.34 $40 national rate and lower 3.00 $35.12 $35.31 than other regional states 2.97 $35 $31.82 2.83 2.50 The average hourly wage 2.47 2.44 $30 for nurses in Rhode $30.23 2.00 Island is $35.12, higher $25 than the national rate 1.50 $20 and about equal to the 1.54 regional average. $15 1.00 Nursing Nursing FTEs per Staffed Bed $10

Expanding the analysis to Nursing Average Hourly Wage all staff yields a similar 0.50 $5 pattern: RI is in the middle of the region, and - $0 all of New England is well Rhode Island United States Massachusetts Connecticut Vermont above the national rate. Source: Hospital Association of Rhode Island via Medicare Occupational Mix dataset, FY10

7/19/2012 Rhode Island Coordinated Health Planning Council 17 The number of non-hospital outpatient sites is rising along with hospital outpatient volume

Number of Licensed Non-Hospital Outpatient Providers in Rhode Island Along with the shift Monthly, July 2008 - June 2012 from inpatient sites 2,400 of care to outpatient sites of June 12: 2,309 2,300 care, the number of non-hospital July 08: 2,194 outpatient sites of

2,200 care have also grown. 2,100

Between July 2008 and Non-hospital 2,000 June 2012, the number of outpatient centers

non-hospital outpatient perform similar Number Number of Facilities 1,900 providers rose by 5.2% or services to hospital 115 providers. outpatient units but 1,800 at a lower cost 2008 2009 2010 2011 2012 since these 1,700 Source: Rhode Island Department of Health Provider Licensure Data freestanding Non-hospital outpatient providers include organized ambulatory care, ambulatory surgical centers, centers do not have freestanding emergency care centers, kidney disease treatment centers, federally qualified health centers, the overhead of a clinical labs, drawing stations, and radiation health facilities full-service acute hospital. 7/19/2012 Rhode Island Coordinated Health Planning Council 18 Occupancy

D E M A N D & SUPPLY Regional Analysis IMPACT OF TRENDS Future Impact

7/19/2012 Rhode Island Coordinated Health Planning Council 19 Unlike other states and the nation, Rhode Island’s inpatient demand per person is falling while staffed beds per person is rising | FY00-FY10

Rhode Island % Change FY00 – FY10 Patient Days per 1,000 Beds per 1,000 2.5 680 Rhode Island -1.0% 4.3% Inpatient Days per 1,000 2.4 630 596 2.4 United States -10.1% -13.3% 580 2.3 Massachusetts -5.8% -7.7% 2.3 590 Connecticut 3.2% 0.0% 530 2.2 Beds per 1,000 Vermont -29.9% -22.2% 480 2.1 United States Massachusetts 682 3.2 680 Inpatient Days per 1,000 674 Inpatient Days per 1,000 2.7 680 3.0 630 613 635 2.6 3.0 630 2.6 2.8 580 2.5 580 Beds per 1,000 530 Beds per 1,000 2.6 530 2.4 2.6 2.4 480 2.4 480 2.3 Connecticut Vermont 2.4 696 680 Inpatient Days per 1,000 2.9 2.3 2.3 680 2.3 2.7 630 640 2.7 620 630 Beds per 1,000 2.5 580 2.2 580 2.3 2.1 2.1 530 530 Inpatient Days per 1,000 2.1 Beds per 1,000 488 480 2 480 1.9 Source: Kaiser State Health Facts via the American Hospital Association Rhode Island Coordinated Health Planning Council 20 Statewide Occupancy Rate (67%, FY 12) is Falling, Below National Standard for Full Occupancy (83%)

Occupancy Rates, FY11 and FY12 In FY12, the statewide Average Daily Census / Average Staffed Beds Staffed Beds occupancy rate was 67%, down from 70% in Statewide Total 70% 2,417 67% FY11. Only one of

Rhode Island’s hospitals

2011 Westerly Hospital 45% met or exceeded the 96 44% 2012 industry standard for a Memorial Hospital 47% 159 45% Oct. 2011-April 2012 “full occupancy” hospital

Newport Hospital 51% (80% and 85%*.) 135 49%

Roger Williams Medical Center 59% 161 51% The occupancy rate is

St. Joseph's Health Services of RI 65% the ratio of the average 231 60% daily census to total South County Hospital 70% 76 61% staffed beds. Hospitals

Women and Infants Hospital 69% 247 66% with lower occupancy rates may have lower Landmark Medical Center 71% 140 67% net income as they must Miriam Hospital 74%

247 71% cover the overhead National Standard for FullOccupancy for Standard National

Kent Hospital 78% costs of a staffed bed 295 78% without receiving Rhode Island Hospital 83% 630 79% patient reimbursement.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% * See Data Source: Hospital Association of Rhode Island http://www.medscape.com/viewarticle/546181 7/19/2012 Rhode Island Coordinated Health Planning Council _4 21

Low volume compromises hospitals’ ability to achieve minimum essential scale for key procedures

Actual Procedure Volume vs. Volume Thresholds 2010, Leapfrog Group thresholds CABG xx 381

Coronary 2,133 Angioplasty x x x

Lower Extremity 165 = Volume Threshold Bypass xxxxx x = Total RI Volume (2010)

Brain Aneurysm = Indiv. Hospital Vol (2010) 253 X Repair xxxx x

Abdominal Aortic xx x 211 Hospital volume for most procedures is Repair below the recommended minimum thresholds for realizing the quality and Carotid 374 cost benefits of scale Endarterectomy xxxxx x x

0 100 200 300 400 500 600 700 800 900 1,000 1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,800 1,900 2,000 2,100 2,200 Procedure Volume Source: Leapfrog Group, ICD-9 Codes, RI Hospital Discharge Data, Booz & Company analysis Slide prepared by Booz & Company for Lifespan Hospital Corporation and Blue Cross Blue Shield of Rhode Island Rhode Island’s inpatient volume is declining and shifting to outpatient, and IP hospital supply exceeds current demand. However, other factors may increase demand in the future.

What is the net effect of the up and down forces on inpatient utilization in the future?

7/19/2012 Rhode Island Coordinated Health Planning Council 23 Despite some upward pressure, Booz & Company estimates that by 2015, RI utilization could fall by another 6% to 13% beyond existing declines

Upward Pressure Downward Pressure Net Impact Impact on Impact on Impact on Factor Factor Measure Utilization Utilization Utilization Population 0.3% Shifts to 2% - 4% 38 - 82 thousand Bed days Growth + Aging Increase Outpatient Decrease day decrease Access via Health 0.7% - 0.8% Decreasing 2% - 3% $ Savings $85-$170 million Care Reform Increase Readmissions Decrease 1.1% - 2.2% 4% - 10% 105-120 fewer Worsening Health Decreasing ALOS Beds Increase Decrease beds 0.05%- 0.11% Increased Imports Increase 0.02% - 0.05% Avoided Exports Increase

2 - 3% 8% - 17% 6 - 13% Net Impact Increase Decrease Decrease

Source: DOH, AHD, RI Hospital Discharge Data, US Census, Statewide Planning Program - RI Department of Administration, Health Director, Booz & Company analysis; Slide elements prepared by Booz & Company for Lifespan Hospital Corporation and Blue Cross Blue Shield of Rhode Island

7/19/2012 Rhode Island Coordinated Health Planning Council 24

Even though Rhode Island inpatient demand (volume) is decreasing, lengths of stay and admission rates are still above the national average.

What happens if RI performed the same as high-performing states?

7/19/2012 Rhode Island Coordinated Health Planning Council 25 Achieving utilization rates similar to top performing states would result in a 13-33% reduction and less bed capacity needed in RI

Bed Admissions per 1,000 Average Length Bed Days per Capacity Residents X of Stay = 1,000 Residents = Equivalent 2009 2009 2009

121 5.23 633 4.73 -10% -33% 89 -26% 421 Top Decile State 615 fewer by Bed Days per beds used/ 1,000 Resident: needed Idaho

Rhode Island Top Rhode Island Top Rhode Island Top Decile Decile Decile

121 5.23 5.22 633 0% 106 -12% 553 -13% Top Quartile State 230 fewer by Bed Days per beds used/ 1,000 Resident: needed Texas

Rhode Island Top Rhode Island Top Rhode Island Top Quartile Quartile Quartile

Source: American Hospital Association 2009, Kaiser State Health Facts, Booz & Company analysis Slide prepared by Booz & Company for Lifespan Hospital Corporation and Blue Cross Blue Shield of Rhode Island 26 What do the data say?

Demand in Rhode Island: Inpatient hospital demand is decreasing at a faster rate than other New England states from a higher starting point

Decreasing admissions drives falling demand

Hospital outpatient volume is rising in step with the national average

Supply in Rhode Island: Staffed beds per person are increasing while declining or holding steady in other states

There are more staff per bed in RI than there are nationally

7/19/2012 Rhode Island Coordinated Health Planning Council 27 What do the data say?

Impact of Supply and Demand Trends: Hospitals have low occupancy rates with great variation

Supply per person is rising while demand is decreasing, unlike in other states and the nation

Low volume for certain procedures compromises high quality outcomes

Some models indicate that excess capacity will only grow in coming years

7/19/2012 Rhode Island Coordinated Health Planning Council 28 Conclusion

The problem: Rhode Island inpatient hospital supply exceeds current and future inpatient hospital demand

The Challenge:  Given our excess capacity, what is our ideal hospital landscape?

 How can we best organize our primary care infrastructure to support realigning capacity to need?

7/19/2012 Rhode Island Coordinated Health Planning Council 29