Employer-Led Healthcare Innovation
Healthcare costs continue to skyrocket in the U.S. despite government regulations aimed at moving us towards a more value-based healthcare reimbursement model. According to the Milliman Medical Index, the average total healthcare cost for a family of four including both employer and employee spending has risen 167 percent since 2002 from $9,235 to $24,671. These increases have negatively impacted both employer profitability and employee disposable income in a big way. Rather than waiting for a government-led solution, many larger employers are taking matters in their own hands by launching innovative healthcare initiatives to help better manage costs for themselves and their employees.
Regional Health Improvement Collaboratives
The Network for Regional Healthcare Improvement (NRHI), a national organization supporting Regional Health Improvement Collaboratives (RHICs) represents 35 large RHICs where public and private employers, providers, health plans and consumers are partnering to create innovative programs to measure and improve quality and reduce costs. Nationwide over 50 collaboratives have been established with the goal of speeding healthcare reform on the ground vs. in Washington. To achieve their goals these collaboratives are partnering on:
- Performance management best practices
- Payment and delivery system reform
- Quality improvement training
- Patient education and engagement
- Strategic planning and coordination
Intel and the Portland Collaborative
In their 2015 Harvard Business Review article, “The Employer-Led Healthcare Revolution,” Patricia McDonald, Robert Mecklenburg and Lindsay Martin described how Intel decided they needed to take a more hands-on approach to controlling rising healthcare costs. While more mainstream tactics like providing high-deductible plans, opening onsite clinics and offering a variety of wellness incentives generated some improvements, these initiatives didn’t address the root causes of healthcare spending issues. In 2009, Intel partnered with Virginia Mason Medical Center and Cigna to apply their expertise in “lean” manufacturing techniques into the healthcare arena. The three partners initially focused on implementing more efficient clinical processes for screening and treating six chronic conditions including diabetes and back pain. Within five years the collaborative was able to measure cost reductions between 24% and 49% across at least three of the target conditions. To prioritize improvement efforts, Intel scoured Cigna’s claims data and identified the conditions that would have the most upside for employees, dependents and the company. Prioritization criteria included:
- Expenditures and impact on patients: Intel focused on conditions that accounted for a large percentage of overall spending and impacted large numbers of patients
- Level of complication/medical risk: They started with less complicated conditions where it was easier to adopt new clinical practices
- Ease of standardization: They needed to find processes that could be standardized across multiple delivery systems
- Benefit to health systems: There needed to be benefits not just for Intel and their employees, but for the providers as well
Given these priorities, the collaborative’s initial focus was on; lower back pain, shoulder, knee and hip pain, headaches, breast problems, upper respiratory illnesses, diabetes and preventive screening.
Employers Taking Charge
While large scale, employer-led collaboratives are breaking important ground in healthcare innovation, they are not the only model for employer-initiated reform. The Commonwealth Fund has identified five different types of employer-driven healthcare efforts that have resulted in significant savings for employers and employees alike:
- Patient-Centered Medical Homes: a delivery system model designed to enhance patient care coordination by a single provider. IBM and other organizations started the Patient Centered Primary Care Collaborative based on this model, and there are many other initiatives being trialed.
- Workplace Clinic: Over 30% of employers with 500 or more employees have some sort of workplace clinic in place. These clinics are migrating from a focus on occupational health and wellness screenings to full-service primary care for both employees and their dependents.
- Consumer Driven Health Plans (CDHPs): Employers are increasingly migrating employees to high-deductible plans coupled with healthcare savings accounts (HSAs) with the goal of encouraging employees to take a more active role in their healthcare spending decisions. Twenty-four percent of employees with employer-sponsored healthcare are now enrolled in a CDHP. Learn more about consumer driven health plans.
- Encouraging Greater Patient Engagement: More employers are adopting wellness programs and other measures to better manage their health. From eating right, exercising to preventive care and adherence to disease management programs, employers are experimenting with programs to improve employee health. Read more about patient satisfaction and engagement.
- Value-Based Benefit Design: There is clear evidence that the fee-for-service reimbursement model that dominates U.S. healthcare drives higher rates of specialist referral and unneeded tests and treatment. A Mercer study found that 80% of employers with over 10,000 employees plan to adopt a more value-based approach to their healthcare plans.
Employers looking to take charge of their rising healthcare costs should be taking a proactive approach rather than waiting for a government-led solution. There is significant evidence that employer-led solutions can address the root-cause issues that have made the U.S. healthcare delivery model the most costly in the world. Successful delivery model redesign needs to:
- Better empower primary care providers
- Create a culture of transparency
- Provide improved patient access to care
- Increase cross-provider care collaboration
- Compensate providers based on outcomes vs. services delivered
For more information on how your organization can improve employee health and get control of healthcare spending, contact Paladina Health.