Employers, Health and Health Care: A New Paradigm

Employers, Health and Health Care: A New Paradigm Scott Wallace, Batten Fellow The Batten Institute, University of Virginia

Implementation of Value-Based Health Programs for Employers, Providers, Suppliers and Plans: • practical insights • HBS cases • strategy frameworks • courses • executive workshops • board/team retreat This presentation draws on Michael E. Porter and Elizabeth Olmsted Teisberg: Redefining Health Care, Harvard Business School Press, 2006.

Agenda What’s Up with Health Care? Value-Based Health Care – A (Remedial) Primer More Than an ATM: The Employer’s Role in Health Care Fight the Right Fight: Action Steps for Employers Getting Bit(s): Health Care IT and Employers Wrap-up

Where are the problems in health care? High and rising costs Poor access Skewed incentives Highly variable quality

We can do better.

The goal of health care reform? More care? Less care? Cost control?

The goal of health care reform? BETTER HEALTH

Traditional Reform Options:Treat Symptoms, Ignore Health • No long-term success stories in cost cutting • Living in poor health is more expensive than living in good health • Employers pay >3X more for poor health than benefits • Zogby Poll: universal access is early care, not heroics • Cut and shift costs - pay for less, ration, endure lines

Traditional Reform Options:Treat Symptoms, Ignore Health • Almost every administrative system focuses on cost and ignores health • Poor health costs employers 3X benefits • Rigid procedural compliance is not better • What is the ‘right’ HbA1c level? • Cut and shift costs -- pay for less, ration, endure lines • Administrate our way to bliss

Traditional Reform Options:Treat Symptoms, Ignore Health • Expand access – more mediocre outcomes with more spending (Massachusetts redux??) • Change incentives – watch new games emerge • Argue for a single payer • Cut and shift costs -- pay for less, ration, endure lines • Administrate our way to bliss – ignore health outcomes

Value-Based Health Care Value creating solutions for patients and families Teams treating medical conditions over the full cycle of care Measuring outcomes Getting paid Employers driving changes in care

Value in Health Care Improvement in Health Outcome Value = Cost Efficiency ƒ Quality

Peabody Pays Mayo Clinic Prices to Save on Health-Care Costs by Aliza Marcus Sept. 26 (Bloomberg) Source: http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=atHEjVNWVXow

“The coal producer says it has found an unconventional way to cut health costs: Seek out the nation’s best care and give workers incentives to use it. About two-thirds of operations have proven to be cheaper at better-rated hospitals out of state.”

"We are committed to providing quality cardiac care for our region…Based on data released this summer from Medicare, we are meeting national averages."

The Employer Role in Health Care Where is the problem? Wellness. Does it work? The ROI Tangle Be European – Get employers out of health care

Where is the problem? Hospital errors – big HEADLINES Chronic care – big DOLLARS 80% of expenditures $1 trillion/year economic cost Affecting ~half of all Americans

Chronic challenges Lifestyle driven (digging with spoons) Social afflictions – Family solutions Medical homes and DM: symptoms of a fractured system Current system doesn’t change behavior

“I was able to get in one last lecture about diet and exercise”

Is Wellness Working? • What doesn’t work? • Measuring results Statistics are like bikinis. What they reveal is suggestive, but what they cover up is vital. – A. Levenstein • Health care and strategy • Two words • Strategy components

The ROI Tangle What clearly improves your employees’ health? (Efficiency ƒ Quality) Measure what you can– satisfaction, sustained participation, benefit costs, Cost-shifting impedes measurement (is the goal health?)

On being European – A Greener Grass Issue “American companies cannot compete against European companies that benefit from nationalized health care.” Poor health cost 3X benefits Reform the system – it will go faster if you’re part of the solution

Action Items for Employers Shift your thinking about health Create a new role in health care

Shift your thinking It’s your dinner People want health, not care Health Happens (usually outside the doctors office)

Creating a New Role When you put on the gown, don’t leave your MBA in the locker “In [state your name] we trust” Value’s Pressure Points

Value’s Pressure Points Purchasing a Commodity? Planning to Limit Value Consumer Directed or Patient Centered Small groups, Big impacts

eHealth (all together now . . .) “We’re from the government and we’re here to help” Will it matter? Interoperability, data mobility and some technobabble PHRs – because we need more acronyms

Federal Leadership The White House Team Some Capitol Ideas

The Baucus Plan Individual Responsibility • Strengthening the Employer-Based System • Guaranteed Access • Prevention and Wellness • Addressing Health Disparities • Improving Value by Reforming the Health Care Delivery System • Strengthening the Role of Primary Care and Chronic Care Management • Refocusing Payment Incentives Toward Quality • Promoting Collaboration and Accountability • Health Care Infrastructure [✔]That’s Only Two of the Chapters . . . .

Federal Leadership A Two Part Debate – In Three Pieces The White House Team Some Capitol Ideas

The Three Piece Suit Access – no debate: access to primary care reduces costs in the long term Outcomes – without measurement and improved outcomes, burden of inefficiency grows Cost – value is the only sustainable path

Wrap Up Health, not just health care Quality drives efficiency Value focus drives quality Employers are key Think/Act differently

Employers, Health and Health Care: A New Paradigm