A new partnership model for health systems to expand market share through reducing employers’ healthcare costs
Thomas W. Brink, TWB Resource Group, Inc.February 2015
05/01/2023 2
What if…
You could increase your market share, by… Being seen as the health partner that…
works with business to improve the health of their employees.
works to reduce the cost of healthcare for employers making them more profitable
05/01/2023 3
What will employers be looking for in the next five years?2013 18th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care
Partnerships with healthcare providers who are aligned with the business needs of employer
Employer value proposition – their business needs Reduction of healthcare costs Improved healthcare outcomes
Employers do not buy the argument that high cost healthcare equals quality
Employers see the healthcare system and its unwillingness to aggressively manage expense as the reason for the high cost of healthcare.
Why should health systems market to employers isn’t patient satisfaction enough?
Employers are the largest provider of healthcare coverage in the United States
Due to the ACA 2018 “Cadillac Tax” and smaller profit margins due to a poor economy employers are looking for ways to reduce their healthcare costs
The health system that partners with employers to reduce their healthcare cost will see and increase in market share and volume
Coverage Covered in millions
Employer health plans (‘13 US Census Bureay 169Medicare 49.4Medicaid 2014 69
Employers are looking for means to reduce costs Cost shifting to employees – HSA’s, higher deductibles Restricting choice
Narrow networks Onsite clinics
Wellness – focused on those who currently spend the least. Seeks to keep them from moving to high cost members
Chronic disease management – focus on the high cost members
Health systems talk health not dollars Healthcare providers have been trained and focus on improvement of
individual and population health Business focuses on the bottom line – profit. Although they may
reference the need for better health among their employees they want to see tangible cost reduction.
Health systems focus on wellness, clinical compliance and disease management. Although this is good from a healthcare perspective, health systems fail to show a direct correlation to these efforts and reduction of actual healthcare claims cost of the employer Claims cost is the real measure of cost reduction for the employer
as it affects the employers healthcare premium and whether or not they can become self insured or have to remain fully insured.
A self insured employer accepts more risk and therefore has a lower cost. In order for the employer to accept this risk and go self-insured the employer must have definitive assurance of controlling healthcare cost.
Population health In any given commercial group population 5% of the group accounts
for 70% to 75% of the claims cost Identifying and focusing on this 5% of the population is the
quickest way to show cost savings for the employer Traditional wellness programs focus on the 95% of the group that use
25% - 30% of the healthcare cost. Although the argument is used that this prevents future cost by preventing this group from entering the 5% of chronic high cost users, there is little financial evidence to support this approach. Also, since the average length of time that an employee stays
with an employer in the US is 5.4 years, the employer paying for the wellness does not realize the financial ROU on the wellness benefit – the employees next employer does.
Traditional approaches also may focus on a specific health condition, e.g. diabetes, hypertension, obesity. This approach is based on health providers training to focus on specific health conditions. Individuals with specific health conditions may be in the 5% or 95% of the population. Addressing a specific health condition does not correlate to a direct reduction in claims expense.
Where are healthcare dollars spentHealth Status
Health Spend
5%High RiskComplexMultipledisease
20%-35%Rising risk
Conditions currently under control
60% - 75%Low RiskHealthy
60% - 75%
20%-35%
5%
Traditional approach spends most of the wellness effort on those who use the lowest amount of the healthcare $. ROI = minimal benefit
TraditionalWellness Approach
5% EffortExpensiveDisease
TX
20-30% EffortOften uncoordinated
care resulting in transition to complex
diseases
60% - 75% EffortHealth assessmentsBiometric screening
40%-50% of pts have to PC relationship
Health Spend
60% - 75%
20%-35%
5%
Recommended approach devise programs aimed at those who spend the largest amount of the healthcare $ROI = maximum benefit
NewApproach
Produces highest ROI Health Spend
60% - 75%
20%-35%
5%
• Chronic disease management – risk stratification, intensive case management
• Onsite clinic – reduces ER visits and pharmacy cost coordinates care
• Onsite clinic• Health coaching• Biometric screening
Hlth assessBio screenWellness EdOnsite
Population Health Management – a business ROI based approach
Risk stratification – identify the 5%/25%/70% spend Design specific programs
5% = 70% of spend: Special chronic disease management team (Provider – MD/NP; nurse; pharmacist; diet; behave health: onsite clinc
25% = 25% - 35% of spend: Monitor disease condition, coordinate care; onsite clinic
70% - 5% - 10% of spend: Support healthy life style 5% = 70% of spend has highest ROI for programs not the 70% where
most wellness programs are directed. 2013 Rand study showed no statistically significant savings on wellness
Rand 2013 study on the effectiveness life style management programs showed no significant cost savings for employers – Disease management programs have 8 times the ROI as lifestyle management programs
Rand 2013 study identified that if an employer wants an immediate impact on healthcare cost, disease management programs should be implemented. The most effective “on the ground” disease management program can be done with an onsite clinic
New model: onsite medical home which coordinates care and expands primary care involvement. True medical home
Onsiteclinic
EE’s
Coordcare
Primary
Care
Wellness
PopHlthMgm
05/01/2023
Case example 1: Onsite Medical Home Clinics achieve cost savings - XYZ established an onsite clinic with a nurse practitioner and medical assistant. In 8 months XYZ reduced its loss ration from 140%+ to less than 70%. This resulted in reducing annual premium increases of 30% - 40% to less than 5% for a three year period.
17
Onsite ClinicOpened
Case example 2: Southern IN company has 500 EE’s. Onsite Clinic established stabilizing healthcare cost allowing the company to move from fully insured to self insured.
09-20
05
to 08
-2006
09-20
06
to 08
-2007
02-20
08
to 01
-2009
02-20
09
to 01-2
010
03-20
10
to 02
-2011
03-20
11
to 02-20
12
03-20
12
to 02
-2013
03-20
13
to 02-20
14
2014
Annu
alized
125
175
225
275
325
375
Company X Health Plan Total Cost PMPM
Onsite clinic started
05/01/2023 19
Case example 3: Chronic Disease Management Intervention Programs (CDMI)CDMI is a process of intervention with employees experiencing multiple high cost chronic conditions due to their unhealthy lifestyle. That 5% of any employee population that utilizes 60% - 70% of the healthcare dollar.
Healthcare employer with 3,000 covered lives From 2008 to 2012, CDMI participant claims
decreased by 14.9%. Claims were reduced $659 Per Member Per
Month.
Employer Services Approach
Employercustomer
Employer
Services(branded
under Health
System)
Chronic disease mgm
Health System Services provided based on assessed needs of
and requested by the employer
insurance product
Other
Onsite clinic
Occupational Health
Key employer services Occupational health – all employers required to have by state law.
Entry service to employers for the health system Onsite primary care and occupational medicine – large employers
(500+ employees) can cost justify. Brings care to the customer versus making the customer come to healthcare
Chronic disease management – focuses on the 5% of high cost utilizers. Works well when done within and onsite clinic
Insurance product: When an employer’s healthcare cost is managed, the employer can reasonably accept more risk and therefore reduce his cost associate with a wholly insured plan by moving to self-insured. If the health system has an insurance or TPA product they can work with
the employer to bid down the employer’s health plan administration cost. Even if the employer does not choose the health systems plan, the health
system is see as a factor in helping the employer reduce the cost of the health plan administration.
Progression of services - summary Assessment of employers employee population to determine
the best approach to reduce cost. Analysis of claims, wellness data and other clinical data
Development of programs to address the employers goals. Most likely goals
Reduce healthcare costs Improve health and productivity of employee population
Implement services to address those employees with most serious conditions. 70% of cost Onsite clinic, chronic disease management program
Implement services to address employees with rising risk. 25% of cost Onsite clinic, close monitoring, Rx assessment, Rx compliance,
coordination of care Implement services to address employees with good health.
5% of cost
Top Related