It’s 2012. Let’s Recap

Tom Emerick

Posted 1/02/11 on Cracking Health Costs

Let’s hit a few highlights of 2011.  In Cracking Health Costs we described certain…um…scary trends in health care in the US:

  • US spending on health care is lapping our peer countries while our life expectancy is declining comparatively.  This is a major drain on our economy and is costing us jobs.
  • We have a huge amount of unnecessary surgery and testing.  It’s getting worse, not better.  (Read The Treatment Trap by Rosemary Gibson and Janardan Prasad Singh for real life examples.)
  • In health plans today, a small number of members are spending most of the money.  I’ve seen very large plans in which 10% of members are spending 80% of plan dollars.   These “outliers” are usually in the middle of serious acute health crises and are way beyond wellness, preventive, value-based purchasing, HSA incentives, consumer driven health care, public/private partnerships, etc.  “Outliers” often need specialized tertiary or quaternary care.
  • There is huge variation between tertiary and quaternary referral centers in terms of getting the diagnoses right, having the best outcomes, and saving lives.  The best referral centers are the most cost effective too.
  • Most specialists in the US don’t coordinate care or diagnoses.  As a consequence, a large number of “outliers” are misdiagnosed and/or have bad treatment and surgical plans.  This is a huge opportunity for benefit plans.
  • Alas. We know that true reform can never and will never come from Washington. Members of Congress will see to it that clinics and hospitals in their districts are protected.
  • Health insurers understand this but are often not supported by corporate benefit executives when they delete poor performing doctors and hospitals from their networks.
  • Most benefit executives are looking for the deepest discounts when selecting a network, not the lowest net cost, a big difference.  Lowest net cost comes from getting diagnoses right, avoiding bad surgery, and coordinating care.  Those traits trump deepest discount every time.  A small but growing number of large corporations are getting this one right.
  • If the system is to be reformed it will be done by corporate benefit executives.  Congress can’t.  Insurers can’t.
  • Most of the clinicians who over-test and do a poor job of getting diagnoses and treatment plans right aren’t going to improve until someone takes their patients away.  Period.

The question is, how to take their patients away.  There’s a way.

If you are a benefit executive:

  • Ask your TPA, carrier, or PPO to start figuring out who the “A players” are and load your networks with them.  Ask them to identify the “C clinicians” and begin the process of deleting them from your network.  The savings potential from this is huge. Plus, you will be protecting your employees and improving the quality of their care.
  • Educate your employees about this.
  • For your outlier population, implement centers of excellence for their specialized needs.
  • If your company has more than 5,000 covered lives or so, you should develop and implement direct contracts with the best of the best centers of excellence, ones like Mayo Clinic and Cleveland Clinic.  Great companies like Pepsi, Walmart, and Lowes have done just this, plus many others. You can do it too.

Tom Emerick is a former VP of US Benefits for Walmart. He now consults, and writes at Cracking Health Costs.

About Brian Klepper

Brian Klepper is a health care analyst and the Chief Development Officer of WeCare TLC onsite clinics.
This entry was posted in Analytics, Benefits, Consumerism, Innovation, Market Dynamics, Medical Management, Physicians, Policy/Law/Regulation, Quality, Reform, Supply Chain and tagged , , , . Bookmark the permalink.

One Response to It’s 2012. Let’s Recap

  1. Pingback: This Strategy Makes Sense! A piece from former Benefits VP of Walmart | Hogan Knows

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