By Sarah Gunter
As the transparency around healthcare allows outcomes to be more measurable, employers are shifting their attention to what they can do today – and tomorrow – to play a role in the cost containment and improved outcomes of their employer-sponsored health plans. During the recent Benefit Design Strategies Summit, hosted by The Validation Institute, some of the brightest minds in the industry spoke.
Leah Binder, President and CEO of Leapfrog Group, founded by large employers like Boeing and GM over 22 years ago, with the intention of improving the quality and safety of healthcare, spoke on employer driven healthcare. “I want a healthcare system that applies fundamental principles of good business practice, which is customer comes, first, openness, transparency, competition creates higher value, higher quality care. Those are just fundamental principles of ethical business that should be applied to healthcare,” said Binder.
Host Josh Berlin then asked the panelists to discuss significant trends marching towards the world Binder described. Andrea Cockrell nodded to transparency, which she called, “the first and most fundamental building block of a better healthcare system.” Cockrell worked as a CPA, spending 10 years in public accounting, before working for the city of Plano as Controller, and then as Administrative Services Manager.
“We can't do anything when we are blinded, which we have been in the past, we have been unable to even consider, for example, quality of care,” said Cockrell. “If you can't choose a provider based on quality, then you can't drive the market for quality. You can’t participate in that movement, which we do for everything else we buy. We have much more transparency now than we had before.”
While changes to ERISA laws, like the Consolidated Appropriations Act, are allowing employers new access to data, the process for obtaining this data is opaque. Bringing more clarity to the matter, we heard from Chris Deacon, now with 4C Digital Health, a former bankruptcy attorney and Deputy Attorney General, then special counsel to the governor's office before taking over the state health plan of New Jersey where she represented 820,000 public sector lives. Deacon explains, “Department of Labor has signaled to us over the next two years that they are going to be focusing on mental health primarily. Meanwhile, ERISA rules have emerged that speak to the importance of transparency. They have declined to issue a more robust set of regulations.”
So, while the tools in the toolbox are there, employers must be equipped to actually use them if they are to be effective. “If we can talk to our HR professionals about what we can do as far as risk mitigation from protecting them from fiduciary liability, I think it's going to be really important. We shouldn't wait on regulations. We shouldn't wait for what those provisions mean to be defined by Washington. We need to define them today,” Deacon urges.
Lee Lewis is hopeful that increased transparency will give employers the power to influence the market from the supply side. Lewis is Chief Strategy Officer for the Health Transformation Alliance, which represents around 60 Fortune 100 companies and 500 employers with a total of about 5 million lives. “I think fear beats greed, that in order for there to be change, it must happen at both the carrier level and at the provider level,” Lewis says. “All we have to do is change the incentives. If we make the money smart, so that all the money we spend goes to value that goes to carriers who cooperate. It goes to hospitals who charge reasonable prices and who offer meaningful quality.”
Cockrell remembers how being educated on the differences between a carrier and a TPA brought tremendous clarity during an RFP her organization did a couple years ago. “The carrier’s biggest asset is their medical network, so they’re most likely to side with the providers, whereas a TPA, their biggest asset is the employer.” Leveraging data with this in mind is one way you, as an employer, have the ability to hold providers accountable, Cockrell suggests.
Lewis concluded by citing statistics comparing the United States to the rest of the world, illustrating the potential for change: “The U.S. spends over $11,000 per person per year with an average life expectancy of about 78 years. The next worst is Switzerland, who spends over $9,000 per person per year, but has an average life expectancy of about 84 years, the highest of all European nations. Europe, on average, spends about $5,400 per person per year on healthcare. And then you move into the Michael Phelps of global healthcare, the triumvirate between Singapore, Japan, and South Korea, which spend an average of about $3,500 per person per year on healthcare, and all have life expectancies over 83 years.”
Market forces are at work in all of these countries, yet they all still deliver longer life expectancies at lower costs, Lewis emphasizes. “We should challenge hospitals to run like every other business in the country: control your costs, manage your real estate, and be innovative.” He asks, “If the Four Seasons luxury hotel chain, at a tenth of the cost, can have an average of five people waiting on every person who walks through their doors along with a lavish environment, why can’t we figure out how to do that within other industries?”
In response to the panelists’ discussion, Berlin pointed to an undercurrent in their answers having to do with the move from a more volume driven world of healthcare to a more value driven world. He then asked what the evolution of this world might look like in terms of its impact on employers. Read about the panelists’ responses in Part 2.
