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HR Magazine - November 2000: Care vs. Cost

By William Atkinson  11/1/2000
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HR Magazine,   July 2000 Vol. 45, No. 9

As health care costs continue rising, employers and employees alike are more concerned with getting what they pay for.

If your goal is to reduce the total cost of your health care plan, such a task can be relatively easy. You simply "price shop" and select the least expensive plan.

However, if you’re interested in health care quality, you have your work cut out for you. Forget for the moment the task of actually improving quality. First, you have to find a way to define it and that, unfortunately, is no easy task. In fact, there are many components.

Employees will generally use one or more of the following five criteria to assess the quality of a health plan.

  • Physician inclusion

    In other words, "Is my doctor in the plan?"

    "This can be a very important one as far as employees are concerned," observes Michael Lichman, senior vice president for Willis of New York, an insurance broker. "Personally, I can understand their concern. I’ve been going to the same barber for 12 years and I shudder at the idea of ever having to move out of town and find a new one."

  • Provider location

    A second way employees define quality is, "How close is the physician’s office to where I live or work?"

    "We believe that each employee should have his or her primary care physician within 10 minutes or 10 miles of that employee’s home ZIP code," says Larry Boress, vice president of the Chicago-based Midwest Business Group on Health (MBGH), a regional health care coalition.

  • Waiting time

    A third important concern for employees is how long they must wait to get appointments and how long they must wait in the physicians’ offices once they do get appointments. "Sometimes, employee perception of quality is actually influenced more by wait time than by the quality of the care they ultimately receive," admits Boress.

  • Physician and staff attentiveness

    How friendly and caring are physicians, medical staff and office staff is also an important element of quality to employees.

    "They like providers who will take the time to listen to them," states Jerome Mattern, SPHR, chair of the Society for Human Resource Management’s Compensation and Benefits Committee. "They don’t want to be treated like cattle."

    Again, such a subjective measure may even be more important than more objective measures. "For example, if one health plan had a 97 percent rate of screening for breast cancer, while another plan only had a 60 percent rate, employees overall might score the latter plan better than the former in terms of quality if the physicians performing the screenings in the latter plan spent more time talking to the employees," notes Lichman.
  • Administrative performance

    Finally, employees consider a plan to be of high quality if the plan administration employees are responsive—quick, friendly and helpful. "When employees call the plan with questions or problems, they want friendly, useful help right away," explains Boress.

Employer Quality Assessments

"If you ask most employers, especially smaller employers, to define health plan quality, the majority will identify a high-quality plan as one with a low ‘hassle factor,’ " notes Brian Schilling, director of communications and marketing for the Washington, D.C.-based National Committee for Quality Assurance (NCQA). "In other words, if employees seem satisfied and if there is not a long line of employees outside of HR’s door, they assume it is a quality plan."

This observation is supported by data. Recently, for example, Watson Wyatt Worldwide conducted a survey of employers on the topic of health plan quality. "The No. 1 response from employers was that they wanted their employees to be satisfied," reports Steve Richter, senior consultant in the firm’s Sherman Oaks, Calif., office. "Second in importance was cost."

Relying solely on such criteria, however, can lull employers into a false sense of confidence, because there are other more important quality factors that need to be investigated:

  • Health plan performance data

    Many employers who realize that subjective employee assessments of quality are useful but insufficient go to the next step, which is to seek objective data on overall health plan quality.

    One of the most popular and widely regarded assessments is that offered by NCQA, through its HEDIS (Health plan Employer Data and Information Set) scores, which describe the performance of HMOs around the nation in areas such as immunization rates, mammography rates, etc. "We are now also expanding into PPOs, through our new Preferred Provider Organization Plan Accreditation program," notes Schilling. "We expect to begin to be able to offer useful data here in 2001."

  • Administrative encounters

    Many employers supplement this data with their own experience with their plans. Just as employees assess the "hassle factor" when they call the plan’s offices for assistance, many employers evaluate their own experience in this area. "Employers are very interested in how well the plan’s account management system works when they need assistance of some kind," explains Boress.

  • Health outcomes

    While NCQA data and other such measures are useful, they are limited in that they do not "drill down" to the individual provider level. This is where the real "meat" of health care quality resides—the quality of clinical outcomes.

Larger employers with sufficient staffs and in-house expertise, as well as forward-thinking smaller and mid-sized companies with a commitment to the health of their employees, realize that all the elements of health care quality mentioned so far are important. However, in the final analysis, the most important element should be health outcomes—the actual delivery of health care. In other words, are healthy employees remaining healthy and are ill employees getting better?

Employers are concerned about this assessment of quality for at least two reasons. First, obviously, is the humane concern for their employees and their dependents.

The second relates to cost. Employees who receive quality outcomes end up costing their employers less. High quality outcomes improve productivity because healthy employees show up for work every day, while unhealthy ones either don’t show up or perform at less than optimum levels. "Employers naturally want to maximize employee productivity with the choice of their health plans," explains William Gerardi, M.D., a senior physician consultant with Tillinghast-Towers Perrin in Chicago. Additional savings are reaped over the long term with reduced costs in health care premiums, as well as short-term disability (STD) and long-term disability (LTD) costs.

"This has always been our focus," reports Becky Cherney, president and CEO of Central Florida Health Care Coalition in Orlando. The coalition, founded in 1984 and now representing over 1 million employees, seeks the highest quality health care for employers at the lowest cost. "We have been focusing on quality for 17 years, long before the concept was popular," she states. "We realized early on that discounts don’t heal patients."

Unfortunately, the issue of clinical outcomes, which is really the most important component of health care quality, is the most difficult to measure, according to Blaine Bos, principal with William M. Mercer & Co. in Chicago. "Employers have done a lot in the last five years to define quality in terms of cognitive issues, such as how long employees had to wait," he explains. "However, they have not addressed the functional issues, such as ‘Did you get well?’, which is what really affects health."

Employers’ lack of success in this area is not their fault, according to Bos. No one yet has come up with functional measures on which health care providers, health plan providers, employers and employees can agree. "There is no way to pick up a report and determine that this specific doctor or hospital provides quality outcomes and that we can agree on this rating," he admits.

There are at least two reasons for the paucity of success in moving toward generally accepted clinical quality criteria. Both have to do with roadblocks employers face.

"First, small and mid-sized employers tend to throw up their hands in frustration, realizing that not only can’t they influence quality, but they can’t even measure it," states Bos. "As such, they often allow themselves to be content with NCQA accreditation as a minimum bar of acceptability, along with employee feedback."

Larger employers, even though they may have sophisticated staffs who are interested in the area of functional quality standards, have been unable to create a unified voice to demand movement in this direction. "When you have hundreds and even thousands of large employers trying to create their own functional standards, no one can agree on generally accepted standards," Bos explains. "Even when employers and providers meet, they can’t agree on standards, because they often have different agendas."

As Bos sees it, it will be awhile before there are generally accepted data points for defining the parameters of quality from a functional standpoint. "This leaves us with a fundamental problem, though," he adds. "Until we can define and measure quality, we can’t improve it."

Improvement Strategies

Despite the problems associated with identifying widely accepted functional quality parameters, there are still things employers can and should do to assess and improve the quality of health care their employees receive.

First, realize that the employer needs to take responsibility for health care quality. "A lot of employers feel they can just give their money to a managed care organization or insurance company and that these organizations will take care of everything," observes Cherney. "However, the objectives of these providers are not necessarily to improve health care quality. Their objectives are to move money to Wall Street so they can stay in business. Employers must thus take responsibility for quality."

Next, become familiar with your employees and their unique health care needs. "For example, if you are a bank and 80 percent of your employees are women, you will want a plan that offers a lot of women’s health services," suggests Boress. "Conversely, if you are a steel company with a lot of men and the average age is 48, you will want a plan that emphasizes cardiac, cholesterol and smoking programs. In sum, make sure the plan you select offers the specific services you need for your employee population."

Consider "carving out" certain activities of a plan if you find someone who can do it better. "For example, if you have a lot of diabetics in your workforce, you may want to look around for an entrepreneurial startup that specializes in this type of care," adds Gerardi. "Your existing plan provider will then have to face this competition and try to prove to you that they can provide better value-added services in this area."

Look for a plan provider with a philosophy compatible to yours. "When we select a provider, we try to find out what their overall philosophy is," states Tracy Thompson, benefits manager—health and welfare plans, for Apogee Enterprises in Minneapolis. "We want to know how they operate their business, how they hire and train their people, what their goals and values are and so on. Then, we look for a match with our own philosophy."

Look for a long-term relationship. "We like to think of providers as partners," continues Thompson. "For example, we currently have a five-year arrangement with our provider and the whole relationship focuses on value."

Gather as much data as you can on how various plans are performing. Check with other employers, particularly larger ones, to find out how satisfied they are with the quality of their plans.

Then, once you have selected a plan (or plans, if you offer options to employees), continue to gather and evaluate data. "If you are a large employer with a trained staff and if you can obtain user-friendly reports, then you can evaluate this data yourself," notes Boress. "However, if you are a smaller employer, it may be a good idea to outsource your plan monitoring functions to a vendor that specializes in this service. It makes no sense to receive 100 green-and-white-striped computer sheets and have no idea what the data means."

Once you have a relatively good idea of how the plan is performing, look for areas that present opportunities for improvement. Then, discuss these opportunities with the plan provider. "Make it clear to your providers that you expect them to measure their performance and that you expect them to make improvements on these measurements," advises Cherney.

"Ask the plan provider what they will be doing in the next month to improve the quality of care," adds Gerardi. "Look at each program the plan offers and ask them to show you their ROI for each of the programs."

"We believe that quality improvement is a continuous process," states Wayne Burton, M.D., senior vice president and corporate medical director for Bank One in Chicago. "I meet regularly with our major health plans in Chicago and our other markets to discuss how they are doing, how they are delivering preventive services and so on. We then look for areas of opportunity to move forward."

Don’t just demand improvement from providers, though. Assist them in the process. "Identify the things that you do in your own organization to be efficient and competitive," suggests Cherney. "Then, share these ideas with your provider community and help them implement these ideas in their organizations."

Finally, find a way to increase your leverage in gathering health care quality information and seeking improvements in quality. The best way to do this is to join a regional employer health care coalition. "Providers, such as the hospital industry and pharmaceutical industry, are merging in order to strengthen their positions," explains Cherney. "The message to employers is that they need to do the same. You need to be able to address the health care industry with one voice. No single employer can do this alone with any success."

Boress agrees: "As health plans merge all over the country, each employer becomes a smaller part of the equation. The solution is to join an existing coalition, or at least come together informally, to build the leverage to demand better services, better quality and better rates. Then, work with these plan providers over time to make sure these improvements take place."

"Quality health care pays for itself," notes Cherney. "For example, indirect costs, the costs associated with absenteeism, lost productivity, temporary employees, turnover, sick leave, STDs and LTDs are three to four times the cost of direct medical care. As such, you have both the right and the responsibility to insist on quality care."

William Atkinson is a business writer based in Carterville, Ill.
He specializes in safety, health and workers’ compensation issues.

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