"The big momentum in health care is around consumerism and activating employees and their family members through information and incentives that focus on improving health," said Robert S. Galvin, M.D., former director of global health care at GE and currently the head of equity health care at The Blackstone Group.
During his keynote address at the 2011 World Health Care Congress, held near Washington, D.C., on April 5, 2011, Galvin noted that employers are moving aggressively to use incentives that are tied to wellness program participation and behavioral change. He is seeing this focus among all employers, "not just the 'jumbos.' And that really is new," he noted.
Incentives should be viewed as a long-term investment, Galvin said, and employers should look for a return on their spending just as they do with any other business investment. "A study of GE workers showed that if you pay employees to quit smoking, you have better quit rates" than programs without a financial incentive, he related. That eventually translates into significantly lower health care costs, "worth many times what was spent on the employee incentives."
Another key trend Galvin pointed out: "Providing discounts for using networks of high-quality medical care providers who don't charge above market rates for their services"—for example, requiring employees to share the cost burden if they select a provider charging $3,000 for a colonoscopy when in their locality the same procedure is available for under $1,000 from a provider with a demonstrated record of high-quality outcomes. (Joachim Roski, managing director of the Brookings Institution's high-value health care projected, interjected, "Sometimes you could literally walk across the street and get just as good service at a fraction of the cost.")
Health plans can be designed to reduce unnecessary overuse of low-value services, and Galvin said he sees "impressive movement in terms of CEOs driving health care design decisions" in that direction. Shifting employees into plans that put a greater emphasis on quality and affordability "has to be driven from the C-suite; it cannot sit in the benefits and HR area. As good as those people are, it's not where the tough decisions are made," he stated.
Redesigning health care benefits "involves employees' families; it's emotional. You may be disrupting them from using the doctors they've been seeing," Galvin said. That's why it's crucial to have top leadership explain why the future of the business depends on bringing health care spending under control.
Insurers: Paying Top Dollar for Bad Outcomes
Is Not a Good System
"If a patient gets an infection while in the hospital, the hospital gets paid twice as much. And in the U.S. we see 1.7 million infections among hospitalized patients each year," said George C. Halvorson, chairman and CEO of Kaiser Permanente (U.S.), speaking at the World Health Care Congress near Washington, D.C., in April 2011.
When Medicare/Medicaid and private insurers "stop paying for those bad outcomes, the hospital world will change, the business model for care will change and care will get a lot safer very quickly because you've changed the revenue stream," he observed.
"We need to make health care affordable by having better care and price-competitive care," he added. "It's possible to reduce the health care cost trend down to the level of the consumer price index by changing the system to reward the best care in the best way."
Halvorson urged adoption of "a business model driven by buyers," but he noted that "this must be done systematically" if market mechanisms are to be effective.
While the health care reform act might be a good approach to providing greater access to health insurance, "it does nothing to address quality and affordability," said Mark T. Bertolini, CEO and president of Aetna, speaking on the same panel. It's necessary now "to bring buyers, insurers and providers together in unique ways" to create pathways to ensuring high-quality, affordable care.
"Health care costs are breaking the backs of our employers and of our federal and state governments," noted Sam Nussbaum, M.D., chief medical officer at Wellpoint Inc. "That will drive changes in the delivery system, in the insurance system and in consumers' knowledge of health care."
He noted, "We still have $90 billion being spent across the nation on surgery for back pain, even though the scientific evidence [of effectiveness] is not there. We still have thousands of people undergoing arthroscopic knee surgery, even though extensive studies show the evidence isn't there."
Health plans "need to provide information differently, need to strive to partner differently with doctors and hospitals, need to pay differently and need to engage their members differently," he urged.
Greater use of cost transparency and quality metrics, including better information available to consumers at the point of service, "can begin to reshape the health care system to one that is accountable, one that looks at value and one where high-quality, evidence-based care is delivered at affordable rates," Nussbaum emphasized.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
Promoting Wellness Engagement in the World of Reform, SHRM Online Benefits Discipline, March 2011
Sweeping Health Plan Design Changes, SHRM Online Benefits Discipline, March 2011
Big Jump in Wellness Incentive Dollars, SHRM Online Benefits Discipline, February 2011
Most Still Uninformed About Prescription Drug Costs, SHRM Online Benefits Discipline, December 2010
Medical Decision Support Can Save Surgery Dollars, SHRM Online Benefits Discipline, September 2010
Controlling Health Costs: Success Tips Shared, SHRM Online Benefits Discipline, July 2010
Health Care 'Transparency': Advances Noted; Work Remains, SHRM Online Benefits Discipline, October 2007
Catalyst for Payment Reform
SHRM Online Benefits DisciplineSHRM Online Health Care Reform Resource Page