Happy New Year!
Let’s hit a few highlights of 2011. In Cracking Health Costs we described certain…um…scary trends in health care in the US:
- US spending on health care is lapping our peer countries while our life expectancy is declining comparatively. This is a major drain on our economy and is costing us jobs.
- We have a huge amount of unnecessary surgery and testing. It’s getting worse, not better. (Read The Treatment Trap by Rosemary Gibson and Janardan Prasad Singh for real life examples.)
- In health plans today, a small number of members are spending most of the money. I’ve seen very large plans in which 10% of members are spending 80% of plan dollars. These “outliers” are usually in the middle of serious acute health crises and are way beyond wellness, preventive, value-based purchasing, HSA incentives, consumer driven health care, public/private partnerships, etc. “Outliers” often need specialized tertiary or quaternary care.
- There is huge variation between tertiary and quaternary referral centers in terms of getting the diagnoses right, having the best outcomes, and saving lives. The best referral centers are the most cost effective too.
- Most specialists in the US don’t coordinate care or diagnoses. As a consequence, a large number of “outliers” are misdiagnosed and/or have bad treatment and surgical plans. This is a huge opportunity for benefit plans.
- Alas..we know that true reform can never and will never come from Washington. Members of Congress will see to it that clinics and hospitals in their districts are protected.
- Health insurers understand this but are often not supported by corporate benefit executives when they delete poor performing doctors and hospitals from their networks.
- Most benefit executives are looking for the deepest discounts when selecting a network, not the lowest net cost, a big difference. Lowest net cost comes from getting diagnoses right, avoiding bad surgery, and coordinating care. Those traits trump deepest discount every time. A small but growing number of large corporations are getting this one right.
- If the system is to be reformed it will be done by corporate benefit executives. Congress can’t. Insurers can’t.
- The most of the clinicians who over-test and do a poor job of getting diagnoses and treatment plans right aren’t going to improve until someone takes their patients away. Period.
The question is, how to take their patients away. There’s a way.
If you are a benefit executive:
- Ask your TPA, carrier, or PPO to start figuring out who the “A players” are and load your networks with them. Ask them to identify the “C clinicians” and begin the process of deleting them from your network. The savings potential from this is huge. Plus, you will be protecting your employees and improving the quality of their care.
- Educate your employees about this.
- For your outlier population, implement centers of excellence for their specialized needs.
- If your company has more than 5,000 covered lives or so, you should develop and implement direct contracts with the best of the best centers of excellence, ones like Mayo Clinic and Cleveland Clinic. Great companies like Pepsi, Walmart, and Lowes have done just this, plus many others. You can do it too.
Tom Emerick
Note: Cracking Health Costs is a blog dedicated to providing commentary on current events in health care and health care funding. While this blog may be of interest to a broad spectrum of readers who are concerned about the state of health care today and in the future, much of the content is directed to employers, health plan sponsors, members of employee benefit plans, and anyone else concerned about ever-escalating health care costs.
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This is an outstanding perspective of a benefits person. I could not agree more that the pathway to reformation of our wasteful, inefficient healthcare mess is through the actions of employers who have taken the steps to realign their thinking about how they identify waste and appoint action steps to eliminate waste while improving the quality of care and costs for employees. It can best be summed up by saying that our current health care system is chaos seeking order.
Chris,
Thanks for the note. It is indeed chaos seeking order…well said.
Cheers,
Tom Emerick
Tom:
The question du jour is – “how do you get corporate benefit executives to act on innovation initiatives?” In my discussions with a number of them, the prevailing attitude seems to be one of “don’t make waves” – or a clear subliminal message “we’re too lazy or indifferent to do the work involved with disruption”. I sometimes think the most dead-end destination for innovation is corporate human resources. YET – with all of the financial carnage taking place as a result of the waste and inefficiency of our health care system, corporate America still clings to the notion that the inferior data reporting and lack of utilization transparency of the Cignas,United Healths, Aetnas, and BC/BS are the third-party claims administrators they want to handle their claims (because of the great “discounts”, while accepting that they are not getting the intel on how, why or where they are leaking dollars. If corporate America had the intestinal fortitude to demand telling data – and then act on it, I know we’d have a far more cost-effective system, better and less expensive health care for employees and far less bleeding of corporate dollars. When Price WaterhouseCoopers and the Institute of Medicine estimate that out of a $2.5 trillion annual U.S. health care outlay, that one-third to one-half is wasted, that says something jarring. The Canadians I’ve communicated with at the University of Manitoba Centre for Health Policy are pretty bemused at our tenacious clinging to a fee-for-service free for all. And we laugh at them?
Christopher, great comments and questions. I’ve highlighted your comment in my blog today with my best answer.
There is hope.
tom emerick
Tom, you’ve drawn a straight line between the cost/quality problem, and the cost/quality solution, and it runs right through corporate benefits/HR. A critical issue is C-Suite expectations. In no other part of the business would executives tolerate the hands-off/sloppy management of their supply chain; yet, when it comes to the health of human capital, companies are happy to hand the ball off to third parties with only the vague references to the “value” they want their health care dollars to buy. We’ve just published a book entitled “Bridging the Value Gap…” which provides a framework and case examples to inspire and guide transformation at the market level. Sponsored by J&J, it is available at no charge at http://www.bridgingthevaluegap.com. Hope your readers find it useful.
Thanks Chuck. I’ll look forward to reading “Bridging the Value Gap”.
tom
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Thanks to leaders like Tom Emerick, a handful of companies are beginning to view their spend on health care the way they view spending on any other vendor: with wisdom and discernment.Leapfrog will help any company ready to do so.
Thanks for you kind comment.
Tom,
Thank you for the provocative post. Yes, not all providers deliver the same value. A related study to this issue was posted by Wendy Lynch:
http://www.hcmsgroup.com/highcost-hospitals-because-patients-sicker-think-again/#comment-1508
In health care, more is often not better as our friend Dr. Nortin Hadler often points out. I don’t believe plan sponsors can afford to keep their hands off the wheel much longer. I hate to harken back to the failed days of “managed care”, but we need to reduce the use of no/low value services, reduce the use of poor quality providers, minimize the number of “train wreck” claimants, and better manage the train wrecks when they occur. The “blank check” approach is making us more and more noncompetitive in the global marketplace.
Thanks for the note. Your words are most wise as always.
tom
“If the system is to be reformed it will be done by corporate benefit executives. Congress can’t. Insurers can’t.”
Right on target, Tom!
[...] idea of what Tom likes to write about on his blog, you should check out his 2011 Recap post over at http://crackinghealthcosts.com/index.php/2012/01/its-2012-lets-recap/. This recap talks about scary trends in health care in the U.S. Some of the highlights [...]