Wake up employers: you can overcome barriers to high value healthcare

Tags: Healthcare reform | PPACA

In a recent article on The Health Care Blog entitled 'Human Resources and Surviving Healthcare Reform', Mike Turpin spells out the big issues facing employers as they prepare to navigate the unpredictable consequences of healthcare reform legislation (PPACA).

After a dispiriting view of the challenges faced by HR professionals: "getting hit from all angles – finding it difficult to continue to transfer rising costs to employees, unwilling to absorb double-digit trends, under-staffed to intervene in the health of their populations and uninspired to assume the role of market catalyst to eliminate the perverse incentives that reward treatment of chronic illness rather than its prevention.”

He nonetheless cautions that: “inaction and lack of planning will cost employers dearly…employers must forge ahead to address the intended and unintended impacts on the estimated 180 million Americans covered under their employer-sponsored healthcare plans".

Turpin’s recommendations for action -- which include warning employers against dumping health coverage, advocating for employer self-insurance, and promoting aggressive population risk management -- culminate in the following call to arms:

"You are the 'market forces' everyone keeps talking about and you need to use this power to influence on-going reform. ... Congress will only listen to employers because the other stakeholders have a perceived conflict of interest in how health reform is ultimately resolved. Employers must build up the courage and resolve to begin to reshape the ... delivery models that result in overtreatment and lack of accountability for poor outcomes."

Employers are a sleeping giant … and it’s time to wake up!

There is enormous opportunity for employers to positively affect the health of employees, the value they get for health benefits spending, and, ultimately, the future of healthcare in the US.

On the other hand, the consequence of inaction is predictable and catastrophic.

Employers can reduce demand and streamline supply of healthcare.

Reduce demand

What Turpin refers to as population risk management, the first way that employers can improve the value they achieve from their health benefits spending is to lower the demand for care by improving the risk profile of their employee population. For those graphically inclined, this means shifting the risk curve by encouraging those at relatively low risk to stay healthy (and get healthier) while engaging those at highest risk to change their lives.

Before

After

To be successful, employers must first ascertain where health risks lie, then effectively engage employees with plan design, incentives, environmental and cultural changes. No two workforces are the same, but there is a growing and diverse array of strategies and solutions available to engage employees at all levels of risk.

Streamline supply

The second strategy to increase return on health benefits spending is to improve the efficiency of supply by demanding more value from the healthcare delivery system. Employers that intervene and innovate around care delivery and reimbursement stand to reduce ineffective care while promoting better coordinated, higher quality care for employees.

Lower Demand + More Efficient Supply
|-----------------------------------------------> Healthier Employees + Lower Spending
|-----------------------------------------------> Increased Productivity and Profitability

So why then have employers generally been unsuccessful in achieving high value from their health benefits spending? Here are some commonly perceived barriers:

None of these barriers are insurmountable if employers adopt a proactive approach and take advantage of the leverage they have:

Lowering demand and streamlining supply are prizes not easily won for employers.

But with the health of their workforce, the competitiveness of their company, and the future of US healthcare hanging in the balance – they are certainly worth fighting for. The path will look different for every employer, but following these general principles puts success within reach for employers, their employees, and the future of healthcare in the US.

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