Big employers adapt to fix health care

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The American healthcare system has a unique financial hydraulics, a sophisticated and opaque “game” that depends on self-insured employers to make and keep entire providers for the “underfunding” perceived by public payers like Medicaid and Medicare. Doctors and hospitals are completely dependent on the financial margin from commercial insurance. RAND studies show that, on average, private purchasers pay about two and a half times more than Medicare rates for inpatient care (even more than Medicare for outpatient hospital services).

The COVID-19 pandemic has only intensified this dynamic. Despite massive federal spending, employers fear an overwhelmed health care system will turn to them to address the financial pressures created by the pandemic — squeezed financial margins, increased labor supply and costs, and greater intensity and complexity of care required by patients.

Big business wants and needs the existing healthcare system to function. But to date, too many solutions to fix what’s broken have come down to a version of MTV’s “Pimp My Ride.” We take a broken chassis and engine and bolt state-of-the-art technology to a tired, old and inefficient frame. Large employers are no longer willing to play this game or continue to issue blank checks to hospitals, doctors, health plans and consultants without concern for the quality and proof of results.

Writing a New Team: Where Employers Are Heading

Many large US corporations, including Disney, Walmart and Boeing, are partnering with private organizations and nonprofits to create new game-changing ventures by leveraging their vast purchasing power. to tackle inefficiency. Rather than a “Pimp My Ride” approach, they are increasingly thinking about how to create a new performance vehicle by pushing fundamental changes in the way clinical services are designed, priced and delivered in five broad areas.

Set and adhere to standards

Increasingly, large self-insured employers are focusing on working with entities that meet their quality and service standards and are open to meaningful measurement of their performance. We will see more and more companies move away from one-size-fits-all agreements with large health systems and health plans that continue to operate as usual. And they will work with providers willing to move away from the fee-for-service system (to which employers acknowledge contributing), which does not provide the kind of care they know will keep their employees healthy. Some large companies are making a strong commitment to changing payment within 3 years so that integrated care focused on health and wellness outcomes can thrive.

Resist vendor and payer consolidation

Major employers will continue to carefully consider further consolidation of the healthcare system, despite the unfounded argument that it is somehow better for the consumer. And they will push the boundaries of anti-competitive business practices that raised costs unnecessarily and intentionally, using the Sutter Health lawsuit as a model.

Disciplined Buying of Digital Disruptors

As huge sums of money continue to flow into so-called “digital disruptors”, big employers want to know which solutions actually do what they claim, and they are turning to outside organizations to help them. deal with the onslaught of sales pitches and evaluate new companies with clinical rigor and outcome data. These ratings will help large companies make buying decisions.

Make intermediaries accountable

Big employers are also more aggressively holding the industry intermediaries they hire to fight for them and their employees accountable for cost and quality performance, whether it’s consultants, health plans or pharmacy benefit managers. The historically unmet expectations of employers that their suppliers be transparent about how their money is spent will transform with the fiduciary requirements of the Consolidated Appropriations Act 2021 and, as self-insured employers face new obligations to demonstrate the value of the services they purchase.

Targeted public policy initiatives

Finally, with the support of skilled coalitions, large self-insured employers are more vigilant in finding policy solutions where the market has failed. This has been the path to success in advocating for an end to surprise billing, the demand for hospital price transparency, and provisions in the Balanced Budget Act to extend negotiated pharmaceutical discounts to commercial payers.

At the end of the day, failing to take bold action to fix health care and change the “Game” employers’ fund while others profit from it is now a greater threat to their business and their employees than continuing on. the current path. But even the biggest employers know they can’t change the system alone. The way to do this is to increase their firepower by teaming up with other private and public purchasers to put pressure on the healthcare system to improve its performance. The “game” needs to change, and many of the nation’s largest employers are taking bold steps to make it happen.

Elizabeth Mitchell is CEO of Buyer Business Group on Health, a member coalition of some of the largest employers in the United States Ian Morrison, PhD, is an internationally acclaimed author, consultant, and futurist specializing in long-range forecasting and planning with a particular focus on health care and the changing business environment.

Disclosures

Morrison has for decades been a paid speaker and advisor to many sectors of the healthcare ecosystem, including hospitals and health systems, health plans, employers, and pharmaceutical and medical technology companies. He is currently a board member of the independent nonprofit Martin Luther King Community Health System in Los Angeles, a senior advisor to Leavitt Partners, a member of the Founders Council of United States of Care, and a senior advisor to Concord Health Partners. . , a private equity firm.

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