As payments shift to bundled, that will position us well with the commercial base as well, so we're not just banking on CMS. The first group we managed was the health of our own team members, which amounts to about 15,000 people under Crestpoint. And as of last January, we have about 250 covered lives under Medicare Advantage with plans to grow that significantly over the years.
HLM: Many of your peers are experiencing serious volume declines recently. Do you think you are prepared for that?
Vonderfecht: We recognize that over the next 10 years we can expect—absent taking market share—about a 30% volume decline. I wasn't surprised because we have a good relationship with Geisinger, and they told us that's what they had seen over last number of years as they moved to population health.
And they were seeing it not only in their own hospitals but other hospitals in the area. You're seeing volume declines across the country and part of it is the ACOs and the focus on keeping people out of high-cost settings. If we lose 30%, that's a lot of our revenue, so we're working on backfilling that by moving to the top of the healthcare food chain to capture part of the savings through creative stuff with other insurance companies. But we can capture all of it if we're the insurer. Also to lessen the impact of volume declines, we're also focusing on outpatient ambulatory and retail activity. For example, we now own seven pharmacies.
HLM: Sounds like you're doing all you can strategically, so what else worries you?
Vonderfecht: Even with employing all these strategies, we can still expect declines in revenue and profitability, so we have to get more cost effective. We're in the top decile on performance in already, but there's 20-30% loss due to waste in healthcare so we work very hard with Lean.
We've embedded consultants into our organization, and escalated up to 2,000 team members involved over the past several months. And it works. We've saved in the range of $10 million in the 18-month time period so far, so there's a lot that can be found there. Our board understands we need to change and embed this, and it's a real education process.