A particularly pernicious American healthcare myth holds that costs are out of anyone’s control. Health plans and benefits consultants often convince organizational purchasers that costs simply are what they are, and that no better alternatives exist.
Nothing could be further from the truth. In fact, there’s reason to believe that a new crop of “high performance” healthcare innovators could make healthcare more rational. The question is whether employers and unions will embrace the high performers, independent of their health plans. Are they sufficiently frustrated that they’ll step outside the poorer performance conventions placed on them by health organizations invested in the status quo?
The marketplace is exploding with high performance healthcare companies in various high-value niches, founded by evidence-driven leaders with deep subject matter expertise. Each has rethought some clinical, financial or administrative problem, and developed a different, better solution — with improved health outcomes and/or lower cost — than the conventional approach.
Take musculoskeletal disorders (MSDs), which typically represent 20% of group health spending and 60% of occupational health spending. One company has developed treatment pathways that let it intervene in 80% of cases, and rigorous quality management that allows continuous improvement. After more than 100,000 patient encounters with commercial populations, the data show that, compared to conventional orthopedic care, it’s clinicians obtain dramatically better pain reduction, enhanced range of motion and improved Activities of Daily Living. Recovery time and costs are cut in half. Three-quarter of surgeries are eliminated, imaging drops by half and injections are reduced by more than one-third. The organization is so confident in its capabilities that it will financially guarantee a 25% reduction in MSD costs. This usually translates to at least a 4-5% savings in total healthcare spend. True savings are generally higher.
Similar results are available within a variety of high cost sectors. Managing drugs can drop total spend by 7%. Managing imaging reduces costs another 6%. Similar savings, with enhanced health outcomes, are available by properly managing cardiometabolic care, oncology, dialysis, allergies, surgeries, and so on. Managing financial processes, like moving to reference-based reimbursement and closely reviewing medical claims, are additional ways to streamline healthcare costs.
Why, you ask, doesn’t your health plan make these services available? It’s not currently in their interest, because at the end of the day most health plans make more if healthcare costs more. And they’re usually not interested in antagonizing their network providers, even if they’re not high performers.
Resistance to change
Worse, while a growing group of benefits advisors and managers are seeking new value through the innovators, the bonds between mainstream health plans, benefits advisers and employer benefits managers are usually rock solid and resistant to change. If an alternative solution is not firmly in the interests of the health plan and the advisor, the benefits manager may be loathe to disrupt that relationship, especially if the new solution is going to need care and feeding beyond what’s currently required. So even if the high performance offering delivers better health and significant savings, getting it on the plan may be a hard sell.
Even so, the budgets and patience of many businesses and unions are exhausted. Think school districts; They’re often willing to think differently if it’ll relieve their financial pressure, especially if they’ll get better health outcomes in the bargain. They’re receptive to considering programs that can deliver better results.
That’s the way these programs — think of them as modules — are entering the marketplace now. An employer says, sure, let me amend my summary plan document and I’ll try the musculoskeletal disorder management and the claims review modules. If those work, let’s think about imaging. When the savings materialize, they’ll gush to their benefits manager pals. So, one program at a time, healthcare will begin to change.
Now imagine what might happen if you put several of these modules under a single health plan structure. You could pass along the cumulative savings of each in the form of lower health plan costs. Consider what might happen if you could, say, guarantee a benefits manager a 25% reduction over current healthcare spend, with better outcomes. That would be an offer that she couldn’t refuse, especially if her CFO heard about it.
The high performance modules I’ve described are in the market now and are available to innovative purchasers. The trick is identifying and vetting them so purchasers are comfortable that they actually deliver. The larger idea of high performance health plans is under development now as well and we should start to see some in early form in the next year or so.
The results consistently available in these high performance healthcare organizations’ offerings clearly reflect the tremendous, corrosive slop in the US healthcare system, and represent a better way forward. If they can get a foothold in the marketplace, their spectacular value propositions might overcome the health industry’s relentless focus on driving high priced excess. That could begin to change everything for the better.
Brian Klepper is a health care analyst and Principal of Worksite Health Advisors.