In our Healthcare Outlook for 2019 webinar, Stephen Grossbart, PhD, and Bobbi Brown, MBA, shared their predictions for the biggest trends of the year. Which predictions panned out and which didn’t? View this webinar as Stephen takes a look back at 2019 and makes his forecast for 2020. So, what did happen in 2019? Following the 2018 midterm elections, we predicted a divided Congress would not pass policies to strengthen or weaken the Affordable Care Act (ACA). We were right. Meanwhile, Democratic presidential candidates debated the extent to which they would support Medicare for All. Insurance costs continued to rise, breaking $20,000 annually for families with employer-sponsored coverage, and CMS continued to support payment policies rewarding quality and interoperability as part of their payment policy. Join Stephen as he looks in the rearview mirror at these important issues and how they impacted the healthcare industry in 2019 and then gazes into the crystal ball to predict the trends that will most impact healthcare in 2020. In this webinar, Stephen discusses the following topics and more: • The continued focus on price transparency. • Congress’ efforts to control prescription drug costs. • Policies that may change the future of ACOs. • What to expect going into the 2020 election year.

1. The Biggest Healthcare Trends of
2019 and What’s to Come in 2020
December 3, 2019
Stephen Grossbart
Senior Vice President, Health Catalyst

2. • What to expect going into the 2020
election year.
• ACA
• Medicaid Expansion
• Prescription Drugs
• Price transparency and
Consumerism
• Financial Performance
• Opioid Crisis
• Social Determinants
Journey
For Today
#

3. © 2018
Health
Catalyst
Top Stories of 2019
3
Politics & Reform — Affordable Care Act,
Prescription Drug Prices, Transparency
Consumerism, Partners & Mergers, Healthcare
Finance, Healthcare Payer
Healthcare Finance, Healthcare Payer
Social Issues – Opioid Crisis, Social
Determinants

4. © 2018
Health
Catalyst
In your opinion, what was the top healthcare story in 2019?
• Medicare-for-all – 20%
• Court challenge to Obamacare – 11%
• Social Determinants of Health – 9%
• Opioid Crisis – 50%
• Consumerism – 9%
Poll Question #1
4

5. Brace yourself – just 28 shopping
days until it’s an election year!
What has happened?
What will happen?
Politics
5

6. © 2018
Health
Catalyst
Political Arena
Health Care Was a Key Issue in the 2018 Mid-Terms
6
Democrats Republicans
Control of House Majority in Senate
ACA ACA replacement
Preserve consumer
protections (preexisting
conditions)
Telehealth
Improve insurance
marketplaces
(exchange)
Red tape relief
Medicare-for-all State empowerment
Common Areas:
• Confronting opioid
epidemic
• Oversight of industry
mergers
• Price transparency
• Rural health
• Prescription drug
pricing

7. © 2018
Health
Catalyst
Congress: Midterms elections in 2018 blocked any
attempt to legislate away the ACA
Federal Courts:
• Texas v. Azar – N. Texas District Court ruled in Dec. 2018 the
ACA unconstitutional
• May 2019 Trump administration argued in support of District
Court decision.
• Fifth Circuit Court of Appeals heard oral arguments in July 2019.
– If successful, 21 million Americans will lose coverage
• Regardless of outcome, expect case to be appealed to
Supreme Court in 2020.
Executive Orders:
• Lower cost short term limited duration insurance available
• Reduced federal financial support for insurance exchanges
• Reductions in Medicaid Spending
• Expanded use of Health Savings Account
“I’m not dead yet” – The Affordable Care Act-2019
7
https://www.healthinsurance.org/blog/2019/07/26/12-ways-the-gop-sabotaged-obamacare/;
https://www.nytimes.com/2019/05/01/health/unconstitutional-trump-aca.html;
https://www.pwc.com/us/en/industries/health-industries/top-health-industry-issues/aca-in-
2019.html

8. © 2018
Health
Catalyst
Medicare-for-all Support Declines as Democratic
Presidential Candidates Debate Intensifies
8 Source: Kaiser Family Foundation https://www.kff.org/slideshow/public-opinion-on-single-payer-national-health-plans-and-expanding-access-to-medicare-coverage/

9. © 2018
Health
Catalyst
Democratic Candidates Views on
Medicare-for-all
9
Do you support Medicare-for-all?
Hey, I’m running too!
Source: Washington Post, https://www.washingtonpost.com/graphics/politics/policy-2020/medicare-for-all/

10. © 2018
Health
Catalyst
Democratic Candidates Views on Private
Insurance
10
Sorry, Did I mess
up your slide?
Source: Washington Post, https://www.washingtonpost.com/graphics/politics/policy-2020/medicare-for-all/

11. © 2018
Health
Catalyst
What Do the Voters Think?
11 Source: Kaiser Family Foundation https://www.kff.org/slideshow/public-opinion-on-single-payer-national-health-plans-and-expanding-access-to-medicare-coverage/

12. © 2018
Health
Catalyst
Medicaid Expanded in 2019 Following the 2018
mid-terms – Expect more in 2020
12
• 37 states & DC now provide Medicaid
Expanded Coverage under the ACA;
one other, WI, did so outside the ACA
framework
• 4 states expanded coverage (Idaho,
Maine, Nebraska, and Utah) in 2019
• Legislation pending in Kansas, North
Carolina, and Wyoming
• Referendums for expansion are
expected on the 2020 ballot in
Missouri, Oklahoma, and South
Dakota,
Source: Kaiser Family Foundation https://www.kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-
act/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D#note-2

13. © 2018
Health
Catalyst
Democratic Candidate’s view on Medicaid
Expansion
13
I’ll get you my
position later
Source: Washington Post, https://www.washingtonpost.com/graphics/politics/policy-2020/medicare-for-all/

14. © 2018
Health
Catalyst
Prescription Drug Prices
Senate’s Bi-Partisan Prescription
Drug Pricing Reduction Act
sponsored by Chuck Grassley (R-
Iowa) and Ron Wyden (D-Ore.)
endorsed by White House in
November 2019
• Unlike the House’s Drug Pricing plan,
the Senate bill does not give HHS
ability to negotiate drug prices or target
private insurance.
Breaking news:
As of December 1st, it appears that Senate
Majority Leader Mitch McConnell and other
Republicans are not willing to bring forward
the bipartisan bill in the Senate
14 Source: American Hospital Association, Chartbook https://www.aha.org/guidesreports/2019-10-25-trendwatch-chartbook-2019

15. © 2018
Health
Catalyst
President Trump’s executive order, June 2019:
1. HHS to publish prices that ”reflect what people actually pay”
2. “Requires healthcare provider and insurers to provide” information about
“out-of-pocket costs.”
3. Help patients find the cheapest and highest quality care
4. Will prompt healthcare to operate in a way more likely to be driven by quality
and price
5. Hospitals and insurers “that public disclosure of competitively negotiated,
propriety areas would lead to higher healthcare prices according to
American Health Insurance Plans
Price Transparency
15
https://beckershealthcare.uberflip.com/i/1147537-august-2019-beckers-healthcare

16. © 2018
Health
Catalyst
With shorter transition to downside risk,
• 8% decrease in number of ACO contracts
• Covered lives increased by 3 million
• Higher percentage of physician led ACOs taking risk
Accountable Care Organizations – Impact of
Pathways to Success
16
1
Source: Health Affairs https://www.healthaffairs.org/do/10.1377/hblog20191020.962600/full/

17. © 2018
Health
Catalyst
Alternative Payment Models Expanding
17
• Category 1: Traditional fee-for-service or other
legacy payments not linked to quality
• Category 2: Foundational payments like care
coordination fees or pay-for-performance
APMs linked to fee-for service and Population-based
payments
Category 3: Shared-savings, shared-risk, bundled
payments
• Category 4: Population-based payments and
integrated finance and delivery systems
Source: Health Care Payment Learning & Action Network. Measuring Progress: Adoption of Alternative Payment Models in Commercial, Medicaid, Medicare Advantage, and
Medicare Fee-for-Service Programs. October 22, 2018; Health Care Payment Learning & Action Network. Measuring Progress: Adoption of Alternative Payment Models in
Commercial, Medicaid, Medicare Advantage, and Traditional Medicare Programs. October 24, 2019

18. © 2018
Health
Catalyst
• Bundled Payment for Care (BCPI)
Advanced launched in 2018, 2nd
cohort of participates start in January
2020, deadline 12/3/2019 to apply
• 31 inpatient and 4 outpatient episodes
– procedure + 90-day post discharge
expenses covered
• Qualifies as an Advanced Alternative
Payment Model
• Payment tied to Quality
• 1,295 participants
Bundles expanded in 2018 and continue to grow
18
Participants in BCPI Advanced
Source: CMS https://innovation.cms.gov/initiatives/bpci-advancedinnovation.cms.gov/initiatives/bundled-payments/

19. © 2018
Health
Catalyst
Is CMS’s strategy working
19 Source: American Hospital Association, Chartbook https://www.aha.org/guidesreports/2019-10-25-trendwatch-chartbook-2019

20. Competitive Threats
Readiness to Compete
Readiness to Meet Customer Needs
Telehealth
Consumerism
20

21. © 2018
Health
Catalyst
Healthcare providers currently lack to capabilities to meet their highest
consumer-focused priorities
Are Health Providers Ready to Compete?
21

22. © 2018
Health
Catalyst
Healthcare providers are not providing services customer/patients
desire
Are Health Providers Ready to Meet Customer
Needs?
22

23. © 2018
Health
Catalyst
Dr. Toby Cosgrove: 2019 will be the Year of Telehealth1
Examples in 20192:
• Jefferson Health, a 14-hospital system reached the 100,000-telehealth visit milestone.
• Stanford Children’s Health 3,500 telehealth visits in primary and specialty care. Currently
home monitors type 1 diabetic and single ventricle patients.
• St. Johns implemented mobile health care and telehealth strategy including rehab consults
for post discharge surgical patients. 700 providers currently trained.
• Amazon and Sam’s Club doing virtual clinical and home visits for their employees
• CMS is pushing telehealth visits put pressure on health systems to develop programs.
Telehealth
23
Accenture: 78% of Consumers Are Interested in Receiving Virtual Healthcare Services3
1Source: Becker’s Hospital Review: Jessica Kim Cohen | January 02, 2019
2Source: Becker’s Hospital Review: Laura Dyrda, Nov. 12, 2019
3Source: HITConsultant 2/2017

24. © 2018
Health
Catalyst
Change in reimbursement for 2020- Final PFS regulations expanded coverage for telehealth
and virtual care.
2019:
• Virtual check-in
• Remote evaluation of pre-recorded patient information
• Interprofessional internet consultation
2020:
• Expanded number of codes for new telehealth services focused on opioid use
disorder
Per American Telemedicine Association (ATA) :
• 36 states and the District of Columbia require that private insurers cover telehealth
the same as they cover in-person services.
Telehealth
24
https://www.cms.gov/newsroom/press-releases/cms-finalizes-policies-bring-innovative-telehealth-benefit-medicare-advantage; https://www.foley.com/en/insights/publications/2019/08/medicare-proposing-new-telehealth-services-
2020; https://www.americantelemed.org/initiatives/2019-state-of-the-states-report-coverage-and-reimbursement/

25. Financial
Performance
25
Mergers & Acquisitions
Insurance Rates
Health System Finances

26. © 2018
Health
Catalyst
• HCA & Mission Health closed in February 2019.
• CHS sell 3 VA hospitals to Bon Secours Mercy October 2019.
• Hackensack Meridian Health Propose Merger with Englewood Health, October
2019.
• RWJ Barnabas Health to acquire Trinitas Regional Medical Center, October 2019.
• Sisters of Charity, Mercy Medical Center to join Cleveland Clinic, September 2019
• Ochsner, Lafayette General plan merger for 33 hospital system, September 2019.
• Priority Health, Total Health Care plan to merge, August 2019.
• University of Louisville Hospital to purchase Jewish Hospital and other facilities
from KentuckyOne, August 2019
• Sanford Health UnityPoint call off $11 billion merger.
• One other fact: In 2018: 21 hospitals closed; by June of 2019: 11 closed
Health System Mergers
26 Source: Modern Health Care; American Hospital Association, Chartbook https://www.aha.org/guidesreports/2019-10-25-trendwatch-chartbook-2019

27. © 2018
Health
Catalyst
Health System Mergers
27

28. © 2018
Health
Catalyst
Disruptive
Integration
28
13
© 2019 Advisory Board • All rights reserved • advisory.com
Vertical integration reshaping industry landscape
Vertical Integration
Source: Google Finance; Health Care Advisory Board interviews and analysis.
1) Advisory Board is a subsidiary of UnitedHealth Group, the parent company of UnitedHealthcare.
All Advisory Board research, expert perspectives, and recommendations remain independent.
2) UnitedHealth Group’s purchase price.
$75.7B
$230.2B
$42.8B
$4.9B1
$57.9B
$41.4B
Combinedmarketvaluation1
Potential industry disruption
Unprecedented mega-mergers claiming the spotlight
Drivers of deal activity
Tax reform brings
for-profit companies
an influx of cash
Margin pressure
intensifies capital needs
in certain sectors
Shifting administrative
priorities changes sources
of projected growth
DAVITA
MEDICAL
GROUP
CIGNA
EXPRESS
SCRIPTS
WALGREENSCVS
HEALTH
AETNA
UNITEDHEALTH
GROUP1
$40B
HUMANA
$66.9B
Source:: Advisory Board, Health Care Industry Trends, 2019

29. © 2018
Health
Catalyst
New Delivery & Partnerships – Are they A Threat?
29
CVS/Aetna, combining 10,000 stores, 1,100 clinics and 22M enrollees.
Amazon is hiring, partnering, investing, and launching.
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.

30. © 2018
Health
Catalyst
Hospital performance improving
Utilization Facts from AHA:
Stable utilization for 2017.
• Admits up 1.5%
• Days up 1.4%
• IP surgery, birth
slight decrease
• OP volume flat
30 Source: Modern Healthcare; American Hospital Association, Chartbook https://www.aha.org/guidesreports/2019-10-25-trendwatch-chartbook-2019

31. © 2018
Health
Catalyst
Payer sector: Fitch 2019 Stable
Healthcare: Fitch 2020 Stable, but risks
include:
• Legal fate of the ACA
• Ongoing opioid litigation
• Election
Finance
31
• Not-for-profits
hospitals saw
operating margins
drop from 1.8% to
1.7% in 2018.2
• For Profit sector saw
increase volumes and
profits3
Sources:
1. MedPAC report, March 2019
2. Modern Health Care, April 26, 2019
3. HealthCare Dive, Nov. 12, 2019

32. © 2018
Health
Catalyst
• 2018 was a profitable year in the individual insurance markets
• Rate increases for 2019 were less than 3% for employers and
expected to be smaller in 2020
Payers
32

33. © 2018
Health
Catalyst
Employers’ Strategic Plans for Managing High
Healthcare Costs
33 Source: Mercer https://www.mercer.us/what-we-do/health-and-benefits/strategy-and-transformation/mercer-national-survey-benefit-trends.html

34. © 2018
Health
Catalyst
• Overall increase in
2019 – 5%
• Workers’ share
increased by 8%
• Employer’s share
increased by 3%
Family Coverage for Health Care Tops $20,000
34
Average Annual Worker and Employer Contributions to Premiums and Total
Premiums for Family Coverage, 1999-2019
Source: Kaiser Family Foundation https://www.kff.org/report-section/ehbs-2019-section-6-worker-and-employer-contributions-for-premiums/attachment/figure-6-4-16/

35. © 2018
Health
Catalyst
Medicare Advantage
35
Medicare Advantage added 1.6 million new
beneficiaries in 2019
Medicare Advantage represents 34% of the total
Medicare population.
The top 8 insurers have 80% of the enrollment.
https://www.kff.org/medicare/fact-sheet/medicare-advantage/;

36. • Opioid Crisis
• Social Determinants
Social Issues –
Opioid Crisis,
Social
Determinants
36

37. © 2018
Health
Catalyst
Opioid Crisis
• 2018: Substance Use-Disorder (SUD)
Prevention that Promotes Opioid Recovery
and Treatment (SUPPORT) for Patients and
Communities Act—was passed with
sweeping majorities of 393–8 in the House
and 98–1 in the Senate.
• Expanded treatment of SUDs
• Provides funding for residential treatment
programs for pregnant and postpartum women
• Authorizes CDC grants for states and localities to
improve their prescription drug-monitoring
programs
• Expands the use of telehealth services
• Helps stop the flow of illicit opioids into the country
by mail, especially synthetic fentanyl and its
analogs
37
Source: CDC https://www.cdc.gov/drugoverdose/images/epidemic/3WavesOfTheRiseInOpioidOverdoseDeaths.png; https://www.ama-
assn.org/delivering-care/opioids/10-ways-new-opioids-law-could-help-address-epidemic

38. © 2018
Health
Catalyst
Disparities and Social Determinants of Health
38 Source: Kaiser Family Foundation https://www.kff.org/disparities-policy/issue-brief/disparities-in-health-and-health-care-five-key-questions-and-answers/

39. © 2018
Health
Catalyst
2009 National Academy of Medicine report on collecting Race Ethnicity
and Language Data launched era of meaningful measurement:
Impact of Social Determinants
39 Source: Kaiser Family Foundation https://www.kff.org/disparities-policy/issue-brief/disparities-in-health-and-health-care-five-key-questions-and-answers/

40. © 2018
Health
Catalyst
• Know where you want to go-update your strategic
plan based on knowledge you now have:
• What will you do if the ACA is repealed?
• Are you ready for price transparency?
• How do prescription drug prices impact your system
and your patients?
• Alternative Payment Models: Are you prepared for
continued expansion by commercial payors & CMS
• Can you analyze your data to support risk?
• Collaborate with Community Partners to tackle
Opioid crisis and disparities.
• Do you collect accurate REL Data?
• Work to reduce the impact of Opioid abuse
To Do List
40

41. © 2018
Health
Catalyst
In your opinion, what will be the top healthcare story in 2020?
• 2020 Elections – 57%
• Growth of Alternative Payment Models – 13%
• Consolidation and changing business models – 18%
• Consumerism – 9%
• Opioid Crisis – 3%
Poll Question #2
41

42. © 2018
Health
Catalyst
If you would like to learn more about Health Catalyst products
or professional services, please answer this poll question.
• Yes
• No
Poll Question #3
42

43. Q&A
Stephen Grossbart
Senior Vice President, Health Catalyst
stephen.grossbart@healthcatalyst.com

44. Thank You!