Insurance & Benefits

Will Mounting Healthcare Costs Be Solved by the Employers Who are Footing the Bill?

Meet the Health Transformation Alliance: Its findings could reduce healthcare spending by 70 percent.

In healthcare reformers’ minds, there are two groups: those who wish to keep the status quo and those who want to change it. Healthcare system costs are unsustainable — everyone knows this — but the system as it exists has made many wealthy. A group of employers who fund of their employees’ ever-rising healthcare costs are trying to change the system.

And these aren’t just any employers.  Walgreens, 3M, BNSF, Marriott, Shell, Coca-Cola and 44 others are uniting under the Health Transformation Alliance. They cover more than seven million lives and represent more than $27 billion in healthcare spending.

Their first order was to aggregate data, determine where the money goes, and then target the areas where savings can be identified. They found the most efficient providers are incentivized by outcomes, work to reduce pharmaceutical spending, and engage employees to make wise choices about their care.

“We know that the US pays more than anybody else for the same or worse outcomes,” says Lee Lewis, the Dallas-based Chief Strategy Officer for the alliance. He says the savings will help employees spend less on healthcare and will be an economic boost to the economy. “If we give a trillion dollars to millions of employees, it constitutes an increase in disposable income and an economic benefit.”

When savings occur for companies, there are losers as well: “Hospitals that are charging too much, insurance companies who are enabling it, consulting firms might be overpaid relative to the value they bring, and workers comp insurers take a percentage of total spend,” Lewis says.

The alliance will enable employers to better analyze their data and see where waste, or even fraud and abuse, exist. It will push for clinical solutions that reduce costs, like at-home or virtual care, near-site clinics, and push employees toward providers that provide quality and efficient care.

Dallas is home to one of HTA’s founding members, BNSF railway, who hopes to be a disruptor. “All the normal players are very much entrenched in the way things work today, which isn’t financially sustainable.” says Pat Pitsch, director of medical benefits and communication for BNSF. “We knew we had to do something different.”

She says they are looking at narrower networks and centers of excellence that provide quality care at better prices, and focusing on musculoskeletal approaches that are more conservative, based on data, and less costly. They are also focusing on cancer care, which is one of the most expensive aspects of providing care for their patients, analyzing referral patterns, and doing their best to guide patients where quality and efficiency remain high.

BNSF’s employees are spread all over the country even though the company is headquartered in North Texas, which makes it more challenging to build an onsite or near-site clinic because it lacks the necessary volume of patients. But Pitsch says another solution might be to partner with other employers to create a similar clinic. The alliance can help facilitate those relationships and provide solutions.

Though Lewis says it may not be immediate, he foresees health insurance priced like car insurance, reducing spending by 70 percent, without a drop in quality. Part of the process may be to do a regional analysis where employers unite to leverage their buying and data power to help other employers find the most efficient employers. The alliance is not yet looking to contract with providers directly. It will allow each company to retain their current insurer to work within their existing relationship to find savings. Lewis says it will be more of a choose-your-own-adventure experience, using the data sharing and solution-gathering benefits of the alliance and picking the solutions that work best for each company. There could be more alignment down the line, but right now, he is focused on data transparency and  employers understand the situation.

“Healthcare demand is inelastic, thanks to the fact that nobody knows what it costs,” Lewis says. The price stays high, and we don’t want that to be the case.”


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