Date: March 17, 2016
Given my vocation, it won’t surprise you to learn that almost weekly I receive an article in my inbox with a title such as “10 Trends in Healthcare for 2016” or “7 Strategies for Employer Health Plans”. Because I am a true nerd and I handle disappointment well, I read every one of them. Most remarkable to me in virtually every article is how many of the “new” trends or strategies recommend some form of cost shifting to employees. A few examples are to: offer more high deductible health plans, implement premium surcharges, increase co-payments to access certain plan benefits, and raise out of pocket maximums to the legal limit.
Let me be clear. I am all for consumer driven healthcare and the increased accountability that comes with it. But if ever the David & Goliath metaphor were appropriate, it certainly is in the sending forth of our employees to navigate our country’s broken healthcare system. Healthcare costs have gone unchecked for decades, growing at 34 timesthe rate of inflation. Even the former president of an Ohio Hospital cites healthcare as his single largest household expense. He writes in a recent WSJ article that his family’s total healthcare costs have increased 1,190% since 1999. The bankruptcy statistics due to healthcare costs are well documented. Can we really ask employees to pay more?
One of the leading contributors to the healthcare cost crisis in our country is massive pricing failure. In contrast to most capitalist markets where price correlates with value, it is often inversely correlated in healthcare. Additionally, the amount of pure waste in our healthcare system is profound. The most often cited study from Price Waterhouse Coopers concluded that more than half of all healthcare spending doesn’t add value. Other countries are getting equal or better patient outcomes at half the cost as we do in the US. Considering these facts, it becomes clear where an employer’s focus should really be in developing healthcare strategies for 2016.
If half of every dollar spent on healthcare in this country is unnecessary, we need to spend less time agonizing over creative ways to finance our healthcare costs and more time negotiating fair pricing for the healthcare services delivered to our employees. In short, if employers ever hope to contain their cost and protect their employees from healthcare-related financial distress, they must pay less for the healthcare their employees receive.
Our firm has proven that, with a properly structured health plan, employers can do this.
Healthcare delivery costs are the vast majority (approximately 70-80%) of total health plan spend. Unfortunately, national health insurance carriers, provider networks, and “generic” health plan documents are all complicit in enabling exorbitant healthcare delivery costs. Each provides for reimbursement of hospital facility and imaging invoices based on a “discount off of billed charges”, a payment scheme that clearly favors the healthcare provider over the employer.
However, across the country, payments to healthcare providers are increasingly being determined based upon Value, rather than Volume. This is simply the novel idea that payments should align with patient outcomes; and, that the current financial incentives that drive most providers to do more medical procedures on their patients are not necessarily helping patients, medically or financially. Direct contracts with healthcare providers are being utilized more and more frequently and we find even healthcare providers are seeking them out in an attempt to circumvent the overhead and profits of the insurance industry.
We have deep experience in:
We guide our clients in creating a health plan document that:
The following case studies reflect typical cost reductions we have achieved with our clients by deploying these strategies:
RESULTS of Contract Innovation Strategies
*Click Chart To Enlarge