During the 2018 mid-term elections, candidates faced off making big claims that they would be the ones to fix healthcare. Now that they are back to work, what can we anticipate with a new Congress? Will we finally see improvements or gridlock? Join Bobbi Brown, MBA and Stephen Grossbart, PhD as they tackle these questions along with a 2018 lookback of what went right and 2019 predictions of the most important trends that will impact our daily work. Beyond political maneuvering, in 2018 we saw material changes in the business of healthcare. The pace of mergers, acquisitions and partnerships was strong and deals like the pending acquisition of Aetna by CVS, could dramatically impact patient behavior and revenue streams. In addition, the Center for Medicare & Medicaid Services (CMS) continues to support existing programs while adding new measures to support transparency, interoperability and a continued shift to value-based payments. What does this mean for your organization in 2019? View this webinar to learn more across these areas: - The business of healthcare including new market entrants, business models and shifting strategies to stay competitive. - Continuous quality and cost control monitoring across populations. - CMS proposals to push ACOs into two-sided risk models. - Historic changes to Merit-based Incentive Payment System (MIPS). - Fewer process measures but more quality outcomes scrutiny for providers. - Increased consumer demand for more transparency. There are many challenges and opportunities for all of us in healthcare. Join Bobbi and Stephen as they draw upon their decades of experience to make sense of the past year and look ahead to give you guidance for the new year. This is the fourth year running that Bobbi has presented her predictions at the turn of the new year and past attendees will remember that her knack for predicting is uncanny and her stories are unforgettable. This time was no different.

1. Health Care Outlook for 2019
January 16, 2019
Bobbi Brown
Senior Vice President, Health Catalyst
Stephen Grossbart
Senior Vice President, Health Catalyst

2. 101 Facts to Learn and Improve Your Life in 2019
101 Ways to Live, Work and Goof Off More
Ambitiously
Source: WSJ, Oct. 25, 2018
Journey
For Today
#4: The next time you have a melt down,
literally melt down. It is very impressive.

3. © 2018
Health
Catalyst
Top Stories of 2018
3
New Players, Partners & Mergers
• Healthcare Finance, Healthcare Payer
Outcomes, Variation, Social Issues
• AJMC, Health Affairs
Reform — ACA, Payment
• Becker’s CFO Report, Health Exec.
Culture, Leadership, Excel
• Harvard Business Review
Total Cost of Care, Digital Consumer
• Healthcare Financial Management

4. © 2018
Health
Catalyst
In your opinion, what was the top healthcare story in 2018?
• Mid-term elections — 17%
• Amazon — 21%
• CMS regulations — 14%
• Consolidation and changing business models — 38%
• Consumerism — 10%
Poll Question #1
4

5. © 2018
Health
Catalyst
Top Health Question on Google
5

6. © 2018
Health
Catalyst
We Can Do Better and Improve Outcomes
The Centers for Medicare
and Medicaid Services
(CMS) readmission
penalties are a significant
concern for healthcare
organizations, with over
2,500 hospitals being
penalized each year,
resulting in CMS withholding
more than $500 million in
payments.
For Westchester Medical Center Health Network (WMCHealth), hospital
readmissions carried more than financial consequences. Care managers
had to use multiple systems and time-consuming, manual processes to
identify recently discharged patients at risk for readmission. To address this
problem, the data analytics teams at WMCHealth and network member Bon
Secours Charity Health System leveraged artificial intelligence and machine
learning to develop a more accurate readmission risk prediction model that
would enable care managers to use their time coordinating and engaging
with patients more effectively.
Results include:
6 Source: Machine Learning Improves Accuracy of Risk Predictions and Improves Operational Effectiveness – Health Catalyst Success Story
A risk prediction model that is 17% more accurate than widely used
readmission risk models in identifying patients at
high-risk and low-risk for readmission within 30-days.
Care managers obtain follow-up appointments faster, usually within
seven days, and connect patients with the services needed to prevent
unnecessary visits to the emergency department and readmissions to
the hospital.
1,327 hours per year saved, freeing up care managers to spend more
time with patients.

7. © 2018
Health
Catalyst
Political Arena
Fact: 2019 Federal exchange enrollment: 8.4 million consumers
Health Care Was a Key Issue in the 2018 Mid-Terms
7
Democrats Republicans
Control of House Majority in Senate
ACA, Preexisting
conditions
ACA reform
Telehealth
Red tape relief
State empowerment
Common Areas:
• Drug pricing
• Surprise billing - also
big in state agendas
• DSH resolution
• Transparency

8. © 2018
Health
Catalyst
November’s mid-term election ends Obamacare
repeal efforts in Congress.1
Future of Obamacare: Congress vs. the Courts
December 14, 2018:
“A federal judge in Texas ... ruling that
the entire health-care law is
unconstitutional because of a recent
change in federal tax law.”2
8
1Source: Business Insider. https://www.businessinsider.com/2018-midterm-election-results-obamacare-healthcare-big-winner-2018-11
2Source: New York Times. https://www.nytimes.com/2018/12/14/health/obamacare-unconstitutional-texas-judge.html
3Source: New York Times. https:https://www.nytimes.com/2018/12/15/health/texas-aca-ruling-unconstitutional.html
December 15, 2018:
“Lawyers on both sides of previous
A.C.A. battles said the reasoning
behind this one was badly flawed ...
Had Congress meant to take such
radical action ... it would have said so
at the time.”3

9. © 2018
Health
Catalyst
Medicaid Expansion Gains Momentum
Post-Election
9
Source: Goldman AL, Sommers BD. Medicaid Expansion Gains Momentum: Postelection Prospects and Potential Implications. JAMA. Published online January 03, 2019.
doi:10.1001/jama.2018.20484
“Expansion could occur in 5 additional
states: 3 through ballot measures
(Idaho, Nebraska, and Utah) and 2
through the election of new governors
... (Kansas and Maine).”
Potentially bringing “the number of
expansion states to 37 ... with a
potential increase in Medicaid
enrollees from approximately 50 million
in 2010 prior to enactment of the ACA
to a projected 76 million by 2020.”
2010: 14% uninsured
2020: 08% uninsured (projected)

10. © 2018
Health
Catalyst
Medicare for All
10 Source: Kaiser Family Foundation https://www.kff.org/slideshow/public-opinion-on-single-payer-national-health-plans-and-expanding-access-to-medicare-coverage/
Fact: 59% of Americans polled in 2018 supported “Medicare for All.”

11. © 2018
Health
Catalyst
Transparency
CMS requirement starting 1/1/19
• Hospitals post on-line prices
• Currently required in CA
Examples:
11
Service Price
MEDICAL/SURGICAL PRIVATE ROOM$2,641.00
TELEMETRY MEDICAL/SURGICAL ROOM$2,701.00
HOSPITAL OBSERVATION SERVICE, PER HOUR$137.00
PLATELETS, LR HLA MATCHED EACH UNIT PATHOGEN REDUCED$3,900.00
PLATELETS, APHERESIS LR, IRR ALIQUOT PATHOGEN REDUCED$2,533.00
DRG 2018 Average Charge
765 - CESAREAN SECTION W CC/MCC $38,415
766 - CESAREAN SECTION W/O CC/MCC $30,170
Source: Catalyst for Payment Reform: Price Transparency & Quality Guide 2017
Another interesting website:
wearthecost.org

12. © 2018
Health
Catalyst
Population Facts
In 15 years, Medicare is projected to
have more than 80 million
beneficiaries—up from 54 million
beneficiaries today.1
Each day 10,000 people join Medicare.
In 2017 the U.S. birth rate was at its
lowest in 30 years.
12
The CDC’s stated life expectancy for 2017 was 78.6 years.
1Source: MedPAC March 2018
2Source: AHA Trendwatch 2016
2

13. © 2018
Health
Catalyst
Consumerism
• 68% of patients are exasperated by
billing processes.3
• 30% of patients rely on retail clinics.3
13
1Source: Bain & Company
2Source: 2015 B2C Elements of Vale survey (n=8,014); 2018 Bain B2C elements of Value survey (n=45,114)
3Source: NRC Health: 2019 Healthcare Consumer Trends
1
2
AHA Futurescan: 64% are very likely to develop
or expand efforts in patient preference.

14. © 2018
Health
Catalyst
Fact: Canadian taxpayers spend less of their GDP on government paid healthcare than
Americans.
Health Spending as a Percentage of
Gross Domestic Product
14

15. © 2018
Health
Catalyst
Personalization
Involve members???
15
Do you know the Blue Button?
https://www.healthit.gov/topic/health-it-initiatives/blue-button

16. © 2018
Health
Catalyst
Dr. Toby Cosgrove: 2019 will be the Year of Telehealth1
Example:
Telehealth
16
Kaiser
sees >50%
of patients
distantly
Accenture: 78% of Consumers Are Interested in Receiving Virtual Healthcare Services2
1Source: Becker’s Hospital Review: Jessica Kim Cohen | January 02, 2019
2Source: HITConsultant 2/2017

17. © 2018
Health
Catalyst
Change in reimbursement for 2019 - Final PFS regulations expanded coverage for telehealth
and virtual care.
CMS recognized a discrete set of services that inherently involve communication technology.
• Virtual check-in
• Remote evaluation of pre-recorded patient information
• Interprofessional internet consultation
Per American Telemedicine Association (ATA):
• 34 states and the District of Columbia require that private insurers cover telehealth
the same as they cover in-person services.
Telehealth
17

18. © 2018
Health
Catalyst
“We are historically focused on personalized healthcare,” says Gregg Talbert, Global Head of
Digital and Personalized Health Care Partnering at Roche.
We’re moving towards a membership culture as a society. Rich Roth, Chief Strategic
Innovation Officer at Dignity Health.
Six key “digital journeys” from Aaron Martin, Chief Digital Officer, Providence St. Joseph
Health:
• “How do I turn technology from a buy into a feature for caregivers?
• “How do I simply care for consumers?”
• “How do I enable revenue streams?”
• “How do I grow commercial share?”
• “How do I better serve Medicaid patients?”
• “How do I better enable behavioral health?”
New Roles in Our Industry
18

19. © 2018
Health
Catalyst
Whole Person/SDOH
19
• Make it easier for vulnerable
populations to access needed health
services and care coordination.
• Humana ‘Bold Goal’ interventions to
improve health of community.
• Allina connecting patients to resources
in their communities to meet their
unique, identified needs.
Fun website:
healthypeople.gov/
State Rankings1
1Source: America’s Health Ranking Annual Report

20. © 2018
Health
Catalyst
Life Expectancy in the US Compared to Peers
Fact: US ranks lowest in life expectancy in a group of 17 high income countries.
20 Source: National Academies Press. https://www.nap.edu/download/13089
FIGURE 1-4 U.S. female life expectancy at birth relative to that for
selected OECD countries.
FIGURE 1-3 U.S. male life expectancy at birth relative to that for
selected OECD countries.

21. © 2018
Health
Catalyst
Life Span and Life Circumstances
21 Source: Institute for Healthcare Improvement. http://app.ihi.org/FacultyDocuments/Events/Event-3135/Presentation-17971/Document-14682/Presentation_2018_IHI_Forum_Keynote_4.pdf
Life Expectancy
∆ 10 years
Loss of Life:
6 Months/Min.
2.3 Years/Miles

22. © 2018
Health
Catalyst
Addressing Disparities One Community
At a Time
22
Source: The Democracy Collaborative. https://democracycollaborative.org/content/anchor-mission-playbook; Institute for Healthcare Improvement.
http://app.ihi.org/FacultyDocuments/Events/Event-3135/Presentation-17971/Document-14682/Presentation_2018_IHI_Forum_Keynote_4.pdf.
Ambition
Increase life
expectancy
Reduce hardship
Improve
quality of life
Intended Impact
Measurable
internal
community
impact
Measurable
external
community
impact
Employee
engagement in
our local
communities
Strengthened
values and
sense of
purpose
Theory of
Change
Collaborate with community partners
Hire locally
and
develop
talent
Utilize local
labor for
capital
projects
Buy and
source
locally
Invest
locally
Volunteer and
support
community
building

23. © 2018
Health
Catalyst
IT World
#CES2019 - 411 vendors showed
health related products (hearing aid,
flying car, etc.)
RAD Robotic Accounting Department
Interoperability
Defined in MACRA/MIPS 25% of score
for 2019
23

24. © 2018
Health
Catalyst
• Advocate, Aurora started in 2017 - closed in 2018.
• Ascension, Providence St. Joseph - talks ended in 2018.
• Atrium, UNC called off in March.
• Bon Secours, Mercy - closed in September 2018.
• Beth Israel, Lahey - closed in September 2018.
• Dignity Health, CHI - one month delay, closed in 2019 as CommonSpirit.
• ProMedica Health System, HCR Manor Care - closed in July.
• Sanford Health, Good Samaritan Society - final in 2019.
• One other fact for 2018: 21 hospitals closed.
Mergers
24

25. © 2018
Health
Catalyst
New Delivery & Partnerships
Unexpected Partners
25
CVS/Aetna is combining 10,000 stores, 1,100 clinics and 22M enrollees.
• CVS Chief Executive Larry Merlo said, “We are hard at work creating a plan to differentiate CVS
Health in these patient journeys with the goal of making them simpler and more personalized while
making care more accessible.”
Amazon is hiring, partnering, investing, and launching.
• Vision: Supplies, pharmacy, insurance, technology, integrator.
Google is hiring physicians including former executives of Geisinger Clinic and the Cleveland Clinic.
They are exploring many areas including partnering with Walgreen’s.
Cigna/Express Scripts combines to create insurer and pharmacy benefit company.
UnitedHealth Group’s OptumCare is buying physician practices.
• Centene, Humana, Anthem has same strategy

26. © 2018
Health
Catalyst
Volumes - OP Revenue Approaching IP Revenue
Utilization Facts from AHA:
Stable utilization for 2017.
• Admits up < 1%
• Days flat
• IP surgery, birth
slight decrease
• OP volume flat
66% of community hospitals part
of system.
26
95
100
105
110
115
120
125
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Trend of Admits per Thousand
AHA Futurescan
71% acquire off-site
facilities for OP
Services.
Source: Modern Healthcare AHA Data January 3, 2019

27. © 2018
Health
Catalyst
Payer sector: Fitch 2019 Stable
Healthcare: Fitch 2019 Stable
• Moody’s 2019 Negative, glimmers of stability
• 10% of hospitals at risk for closure
Finance
27
2013 2014 2015 2016 2017
Rev growth 4.5% 4.6% 7.6% 6.8% 4.6%
Exp growth 5.3% 4.3% 6.5% 7.5% 5.8%
5.3%
4.3%
6.5%
7.5%
5.8%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Growth of Expense and Revenue
Rev growth Exp growth
1.6% Operating Margin FY
17 Not-for-profit
5.0%
2.0%
-1.0%
-2.0%
-3.0%
-4.6%
-6.0%
-7.3%
-5.2%-4.8%
-5.5%-5.4%-5.4%-5.8%
-7.1%
-9.6%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Hospital Medicare Margin1
-9.9% for 2017
1Source: MedPAC report, March 2018

28. © 2018
Health
Catalyst
Financial Data
28
Operating Income (Dollars in millions)
System State
Operating
Income
2017
Operating
Income
2016
Kaiser Foundation Health Plan and Hospitals CA 2,152.0$ 1,924.0$ ↑
Adventist Health System FL 732.8$ 666.2$ ↑
Mayo Clinic Health System MN 707.0$ 475.0$ ↑
Indiana University Health ID 600.6$ 565.5$ ↑
Ascension Health MO 552.7$ 997.4$ ↓
UCHealth CO 494.2$ 465.2$ ↑
New York-Presbyterian NY 404.5$ 324.6$ ↑
Intermountain Healthcare UT 359.0$ 237.5$ ↑
What supports a high bond rating?
• Strong or leading market position
• Strong operating margins
• Solid balance sheet metrics
• Growing market population
Source: Modern Healthcare By the Numbers Dec 2018

29. © 2018
Health
Catalyst
Cost
29
“We need to be zealots on cost," says Robert DeMichiei,
chief financial officer of the UPMC health system.
At Pittsburgh-based UPMC, administrators track cost at
every level - cost per operating room hour, cost per claim
and so on - and then work to lower those numbers, he said.
Walgreen’s Boots Alliance will use zero based budgeting to
cut $1B in annual costs over a 3-year time period.
• Reshape the organization to drive growth.
• 2017 healthcare spend up
3.9% over 2016
• Per capita $10,7391
1Source: CMS NHE report

30. © 2018
Health
Catalyst
CMS Value Based Programs
Readmission Results1
• Rate declined
• Mortality did not increase
• ED/observation did not increase
• Savings of $2B annually
Physician Merit-based Based Incentive
Payment System +/-4%
Hospital Value Based Purchasing +/-2%
Hospital Acquired Conditions -1%
Hospital Readmission Reduction up to 3%
17.8% 17.5% 17.1%
16.4% 16.3%
15.7% 15.3% 15.2%
14.4%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
2008 2009 2010 2011 2012 2013 2014 2015 2016
Readmission Rates for CMS Program
In 2017, 34% of payments
were tied to alternative
payment models.
AHA Futurescan: 74% say risk
based likely by 2023.
1Source: MedPac report June 201830

31. © 2018
Health
Catalyst
Medicare Advantage
31
Medicare Advantage represents 34% of the total
Medicare population.
The top 7 insurers have 76% of the enrollment.
Average margin of 2.6% (received increase of
3.4% from CMS).
For 2019, CMS supplied a broader definition of
benefits.

32. © 2018
Health
Catalyst
Accountable Care Contracts
32 1Source: Authors’ analysis of Leavitt Partners’ accountable care organization (ACO) database.
1 1

33. © 2018
Health
Catalyst
HHS secretary Alex Azar remark:
“One piece of our vision for value-based transformation is pioneering bold new payment
models. Having more Accountable Care Organizations take on real risk, while offering
them the flexibility they need to generate savings, is an important step forward in how
Medicare pays for value.”
Mr. Azar said alternative payment models have produced lackluster results.
Risk
33
AHA Futurescan by 2023:
• Few health systems will sell own insurance product.
• 60% working closer with self-funded employers.

34. © 2018
Health
Catalyst
Projected savings of $2.9 billion over 10 years.
Current Next Gen ACOs saved $164 million for 2017.
• Final regulation published December 21, 2018
• Letter of intent due January 2-18
Five Goals:
• Accountability and Competition
• Quality
• Integrity
• Beneficiary Engagement
Pathways to Success - New Model ACO for CMS
34
AHA Futurescan:
• 66% will use data driven process
to identify high utilizers.
• 45% ED will implement
telemedicine for follow-up.

35. © 2018
Health
Catalyst
Value-Based Care Reports
Report for 15 million members who
received care under a value-based
arrangement.
The intersection of health + care
• Improved outcomes in quality and cost
• 7% fewer ED visits
• 5% fewer hospital admissions
35

36. © 2018
Health
Catalyst
Episodes of Care - Bundles
$12,929
$16,337
$13,738
$5,058
$5,730
$4,689
$3,452
$5,941
$5,137
$806
$824
$812
$1,101
$976
$1,644
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
2014 2015 2016
AMI Bundle Costs
Outpatient
Home Health
Hospice
SNF
DME
Part B
Inpatient
BPCI Results
Medicare payments declined/decrease
in PAC
CJR Decrease of 3.1%
BPCI Advanced
• Started October 2018
• 1547 participants
• Quality scores
• Can opt out in March 2019
36
Most common bundles for BPCI-A
• 53% Major joint replacement
• 45% Congestive Heart Failure
• 44% Sepsis

37. © 2018
Health
Catalyst
Risk
37
Omar Ishrak, chief executive of Medtronic, sees a future where medical technology companies
accept more risk in how they get paid for their products.
• Financial accountability for outcomes
• Signed nearly 1,000 contracts for anti-bacterial sleeve Tyrx
• Deal with Aetna on insulin pumps
Results: Very, very few refunds of cost.

38. © 2018
Health
Catalyst
• Know where you want to go-update your plan based
on knowledge you now have.
• ACO, Bundles, Risk Based contracts: Be ready for
growing data burden. Learn how to analyze claims
data. Build capacity to integrate claims and clinical
data.
• Plan for data, develop new metrics.
• Collaborate with Community Partners.
• Obamacare: business as usual. Expect HHS to
continue to chip away at provisions but no major
change can pass through Congress. Supreme Court
alone can disrupt the ACA before the 2020 election.
And, it’s impossible to predict the Court’s next step.
To Do List
38

39. © 2018
Health
Catalyst
In your opinion, what will be the top healthcare story in 2019?
• Affordable Care Act — 9%
• Big market share gains in new care-delivery models — 21%
• CMS regulations — 8%
• Consolidation and changing business models — 47%
• Consumerism — 14%
Poll Question #2
39

40. © 2018
Health
Catalyst
2019 - Year of ???
NPR news story on
Jan 6th – interview with
Jessica Dore
Moving toward change.
Fun Your view
40
Color
This year I will
1.
2.
3.
Moon
Food

41. Q&A
Bobbi Brown
Senior Vice President, Health Catalyst
bobbi.brown@healthcatalyst.com
Stephen Grossbart
Senior Vice President, Health Catalyst
stephen.grossbart@healthcatalyst.com

42. Thank You!