Nov 07 Breakfast V

Impact of Change Online Edge Fall Meeting November 2003

SG-2, LLC 1560 Sherman Avenue Evanston, Il 60201 847.733.9080 www.sg-2.com

Breakfast Menu 

Tour Impact of Change Online   



National Forecast Market Demographics Market Forecast

Outline the Sg2 National Forecast     

Overall Oncology Cardiac Services Orthopedics Neurosciences

2 © 2003 SG-2, LLC. Confidential and Proprietary

Sg2’s Expert Staff 

Sg2’s staff is composed of clinical, scientific and business professionals



Sg2 experts research, analyze and develop the intelligence that shapes the Impact of Change Model

3 © 2003 SG-2, LLC. Confidential and Proprietary

Sg2’s Proprietary Impact Of Change Model 

Forecasts based on population alone are not comprehensive or deep enough to inform critical business decisions



Sg2’s model examines the cumulative effects and interdependencies of population, emerging technologies and other key factors driving change in health care



The Impact of Change methodology uniquely identifies the key factors driving industry change and forecasts their impact on health care utilization

4 © 2003 SG-2, LLC. Confidential and Proprietary

Intelligence From the Impact of Change Model 

The Edge Briefings 



Strategic Services 



Sg2 Briefings are a series of periodic in-depth studies capturing the current and future state of health care

Sg2 offers a variety of Strategic Services providing custom intelligence specific to your organization

Impact of Change Online

5 © 2003 SG-2, LLC. Confidential and Proprietary

Impact of Change Online 

Impact of Change Online is a Web-based tool that provides instant access to Sg2’s national forecast for all inpatient service lines and DRGs



By entering local demographics, members can customize the forecast and apply national trends to their individual markets

6 © 2003 SG-2, LLC. Confidential and Proprietary

The Sg2 National Forecast   

Overall Oncology Cardiac Services   

 

Cardiac Surgery Interventional Cardiology Medical Cardiology

Orthopedics Neurosciences  

Neurosurgery Neurology

7 © 2003 SG-2, LLC. Confidential and Proprietary

Expect Discharges to Flatten and Then Rise at a Rate Less Than Population-Based Growth Inpatient Utilization Forecast, U.S. Market, 2001 - 2011 Discharges (millions)

41



Population-Based Forecast +11.9% 

40 39 38

SG-2 Forecast

37

+6.3%

36 35



2002-2004: Medical management, high unemployment, consumer costsharing, and increasing premiums flatten discharges 2005-2008: Economic rebound, increased patient survival, and population growth drive positive discharge growth 2009-2011: Discharge growth flattens from more effective disease planning and management. Patients are more aggressively shifted to the outpatient setting

34 2001 2003 2005 2007 2009 2011 Source: SG-2 Analysis, 2003 © 2003 SG-2, LLC. Confidential and Proprietary

8

Local Technology Adoption Strategy Significantly Impacts Future Discharges Inpatient Utilization Forecast, U.S. Market, 2001 - 2011



Discharges (millions) Conservative Adoption

40



+7.3%

39

Average Adoption +6.3%

38

Aggressive Adoption

37

+3.2%

36



Service lines are disproportionately impacted by changes in technology adoption strategy While The Impact of Change Online is based on national technology adoption, local technology adoption strategies may alter a market’s future utilization and case mix More aggressive use of technology typically serves to keep patients out of the hospital

35 34 2001

2003

2005

2007

2009

2011

9 © 2003 SG-2, LLC. Confidential and Proprietary

IoC™ Inpatient Cancer Forecast Total Inpatient Cancer Discharges U.S. Market, 2001 - 2011 Discharges (thousands)

2,800 2,700

Population-Based Forecast +17.2%

2,600 2,500 2,400 2,300

+8.3% SG-2 Forecast

2,200 2,100 2001 2003 2005 2007 2009 2011

Source: SG-2 Analysis, 2003 © 2003 SG-2, LLC. Confidential and Proprietary

Key Points  Technologies that improve early disease detection will significantly increase surgical discharges - Lung CT - Virtual colonoscopy  Advanced diagnostics will reduce discharges - PET/CT  Emerging medical therapies will be more efficacious and less toxic reducing discharges  Advances in radiation therapy will improve outcomes - IMRT - Tomotherapy

10

Cancer Services Impact Many Specialties Beyond the Oncology Service Line DRG 1 Craniotomy >17 W CC Inpatient Discharges, U.S. Market, 2001

NonCancer 57.5%

Cancer Fraction includes: Biopsy Resection Non-Cancer Fraction includes: •Shunts •Decompression •Tissue Ablation •Aneurysm Clipping

Cancer 42.5%

Source: SG-2 Analysis, 2003 © 2003 SG-2, LLC. Confidential and Proprietary

11

IoC™ Inpatient Oncology Service Line Forecast Comparison of Oncology Service Line and Sg2 Cancer Fraction Total Inpatient Discharges U.S. Market, 2001-2011

Sg2 Cancer Fraction

Oncology Service Line Discharges (thousands)

Discharges (thousands)

750

2,600

730

2,550

710 2,500

-8.3%

690

+8.3% 2,450

670 650

2,400

630

2,350

610

68% Medical DRGs 32% Surgical DRGs

590 570

2,250

20 11

20 10

20 09

20 08

20 07

20 06

20 05

20 04

20 03

20 02

20 11

20 10

20 09

20 08

20 07

20 06

20 05

20 04

20 03

20 02

Source: SG-2 Analysis, 2003 © 2003 SG-2, LLC. Confidential and Proprietary

20 01

2,200

550 20 01

40% Medical DRGs 60% Surgical DRGs

2,300

12

IoC™ Inpatient Cardiac Surgery Forecast Cardiac Surgery Service Line Inpatient Utilization Forecast, U.S. Market, 2001 - 2011 Discharges (thousands)

500

Population-Based Forecast +18.8%

400 300 200

-11.6% SG-2 Forecast

100 0 2001 2003 2005 2007 2009 2011 Source: SG-2 Analysis, 2003 © 2003 SG-2, LLC. Confidential and Proprietary

Trends in Cardiac Surgery

• Historic decline in CABG utilization will continue. Drivers of change include the impact of medical management and DES. • Valve procedure growth will be driven by an aging population and expanding indications brought on by MIS/percutaneous procedural approaches. • VAD procedures will also see substantial growth driven by increased reimbursement and declining cost in a increasingly competitive market.

13

IoC™ Inpatient Interventional Cardiology Forecast Interventional Cardiology Service Line Inpatient Utilization Forecast, U.S. Market, 2001 - 2011 Discharges (thousands)

1,000

Trends in Interventional Cardiology Population-Based Forecast +19.1%

900

• Select elective angioplasty cases will shift to the outpatient setting.

800 +6.3%

700

SG-2 Forecast

600 2001 2003 2005 2007 2009 2011 Source: SG-2 Analysis, 2003 © 2003 SG-2, LLC. Confidential and Proprietary

• Earlier disease identification, the effects of medical management and DES will impact angioplasty utilization.

• Angioplasty with AMI will grow at a higher rate than angioplasty without AMI due to the emerging practice pattern of primary angioplasty. • ICD implantation will see significant growth due to expanded indications for CRT-D and CHF patients at risk of SCD. • Procedural growth will be seen due to expanding use of ablation therapies and emerging percutaneous valve replacement techniques. 14

IoC™ Inpatient Medical Cardiology Forecast Medical Cardiology Service Line Inpatient Utilization Forecast, U.S. Market, 2001 - 2011 Discharges (thousands)

Population-Based Forecast

4,400 +17.2% 4,300 4,200 4,100 4,000 3,900 +8.1% 3,800 3,700 SG-2 Forecast 3,600 3,500 3,400 3,300 2001 2003 2005 2007 2009 2011 Source: SG-2 Analysis, 2003 © 2003 SG-2, LLC. Confidential and Proprietary

Trends in Medical Cardiology • The aging population, natural progression of cardiovascular disease, as well as increased survivability of CAD and CHF patients will contribute to growth. • Earlier disease detection and improved medical management of cardiovascular disease will curb inpatient utilization. • Increased focus on disease management, particularly disease management of CHF, will prevent and redirect inpatient medical care.

15

IoC™ Inpatient Orthopedics Forecast Orthopedics Service Line Inpatient Utilization Forecast, U.S. Market, 2001 - 2011 Discharges (thousands)

2,800

Population-Based Forecast +14.5%

2,700

2,400

+10.8% SG-2 Forecast

2,300 2,200 2,100 2001 2003 2005 2007 2009 2011 Source: SG-2 Analysis, 2003 © 2003 SG-2, LLC. Confidential and Proprietary

• The current state of the economy will reduce utilization of discretionary services such as orthopedics. • Long-term growth will be driven by again baby boomers and sociocultural trends such as rising obesity rates.

2,600 2,500

Trends in Orthopedics

• Medical therapies for osteoporosis and osteoarthritis will delay surgical intervention. • Minimally invasive surgical technologies will reduce complications, expand indications and reduce length of stay, as well as shift select cases to the outpatient setting.

16

IoC™ Inpatient Neurosurgery Forecast Key Points

Neurosurgery Service Line Inpatient Utilization Forecast, U.S. Market, 2001 - 2011 Discharges (thousands)

250

SG-2 Forecast +13.8%

240 230 220

+12.8% Population-Based Forecast

210 200 190 2001 2003 2005 2007 2009 2011 Source: SG-2 Analysis, 2003 © 2003 SG-2, LLC. Confidential and Proprietary

 Implantables for treatment and prevention of stroke will contribute to growth in neurosurgery discharges - Coils and stents  Implantables for management of Parkinson’s disease and epilepsy will contribute to increases in neurosurgery discharges - Deep brain stimulator - Vagus nerve stimulator  Technologies that increase precision and accuracy of neurosurgery will contribute to growth in neurosurgery discharges - Stereotactic approaches - Image-guided surgery • Stereotactic radiosurgery will be increasingly important for outpatient neurosurgery services Neuro-oncology services will continue to be a major portion of neurosurgical programs. 17

IoC™ Inpatient Neurology Forecast Neurology Service Line Inpatient Utilization Forecast, U.S. Market, 2001 - 2011 Discharges (thousands)

1,700

Population-Based Forecast +14.0%

1,600 1,500

+9.3% SG-2 Forecast

1,400 1,300 2001 2003 2005 2007 2009 2011 Source: SG-2 Analysis, 2003 © 2003 SG-2, LLC. Confidential and Proprietary

Key Points  Technologies that reduce the incidence of stroke will have the biggest impact on neurology discharges this decade - Medical therapies - Coils and stents  Implantable devices for management of Parkinson’s disease and epilepsy will have a moderate impact - Vagus nervous stimulator - Deep brain stimulator  Emerging therapies for Alzheimer’s services will have little impact on neurology discharges this decade The greatest impact of technology on neurology discharges will be in the reduction of inpatient stroke services 18

Realize the Impact of Change 

To learn more about the Sg2 National Forecast or the Impact of Change Online, please visit us at www.sg2.com or call your Sg2 Account Executive at 847.733.9080

19 © 2003 SG-2, LLC. Confidential and Proprietary

National Forecast Summary

21 © 2003 SG-2, LLC. Confidential and Proprietary

National Forecast Detail

22 © 2003 SG-2, LLC. Confidential and Proprietary

Market Demographics

23 © 2003 SG-2, LLC. Confidential and Proprietary

Market Forecast Summary

24 © 2003 SG-2, LLC. Confidential and Proprietary

Market Forecast Detail

25 © 2003 SG-2, LLC. Confidential and Proprietary

Export to Excel

26 © 2003 SG-2, LLC. Confidential and Proprietary