Stakeholders in healthcare delivery—from the patients and their employers to physicians and insurance executives—are under intense pressure to collaborate to whack away at waste like never before, providing significant cost-saving opportunities for those willing to take risks. But the population remains unhealthy, contracts that pay providers for outcomes instead of volume are still gathering momentum, and employers are not fully prepared to go too far off the beaten path in building their benefits packages.
These were a few of the major takeaways during a four-person panel held in July at D Magazine Partners’ office in downtown Dallas. It featured Dr. Paul Hain, North Texas market president for Blue Cross Blue Shield of Texas, the state’s largest insurer; Marianne Fazen, executive director of the Dallas-Fort Worth Business Group on Health; Dr. Stephen Mansfield, CEO of Oak Cliff’s Methodist Health System; and Dr. Jim Walton, president and CEO of the Genesis Physician’s Group, the region’s largest and oldest group of independent doctors.
Employers are making hospitals and other care settings prove their worth.
During the hour-long conversation, each leader acknowledged that the industry realizes it must change to help cut costs. But change is happening only as far as the employers are willing to take it. And, historically, that’s amounted to a lot of toes in the water.
Still, the tide may be turning, Hain said: “Employers are talking more and more about costs. We used to hear, ‘We want to make sure our HR folks don’t get too many phone calls.’ That’s gone.” He also noted that it’s no longer enough to provide one-size-fits-all benefits packages to similarly sized employers.
Fazen said companies have shown more of a willingness to pass on some of the risk to their employees in the form of high deductible health plans. In some cases, they’re contracting directly with providers. With healthcare spending growth hovering between 6 percent and 7 percent—it fell from 6.8 in 2015 to 6.5 in 2016, and consulting firm PwC expects it to continue at 6.5 in 2017—Fazen said employers want more input from the payer: More data, more concierge-type on-demand help, more products that address each company’s healthcare utilization.
But employers remain hesitant to take more of a risk than their competitors by completely upending their benefit packages. They tend to inch into it. For instance, Fazen noted that high-deductible health plans took about a decade to catch on. “They loathe disrupting their employee workforce,” she said. “They’re very competitive with the others in their industries, so they don’t want to weave too far to try something too innovative, even with all the changes behind the scenes with the partners that they’re doing business with, [like] the providers and the health plans.”
And so tweaking and working within existing parameters have become key strategies. Among them: narrow networks made up of providers that can prove their value, built within geographies that fit the employer’s workforce.
In its annual Behind the Numbers healthcare report, PwC called 2017 “a tough balancing act for the health industry,” which is charged with increasing access while decreasing per-unit cost. Employers are demanding better value for their dollar, which has prompted a response in the form of these so-called high-performing narrow networks. They can be tailored a number of ways—by location, by system, by provider—but they’re guided by the price. Employers are looking into the networks because they “may have squeezed all they can” from shifting costs to their employees through high-deductible health plans. So they’re making the hospitals and other care settings prove their worth.
The plans ideally give employees access to a reputable provider network that controls costs and proves it. Polled in 2016, just 9 percent of employers have implemented one of these networks. But 43 percent are considering it, a 9 percent jump since 2014. The potential savings are significant: According to the study, such networks have helped reduce costs by as much as 35 percent compared to the broader packages.
Value Over Volume
Cost-cutting techniques are also cropping up via transparency and data initiatives that take their cue from helicopter parents (have you taken your medication this week? Have you adhered to your diet?). Blue Cross Blue Shield of Texas has made available more than a dozen network tools to give more information to the plan holders. For example, Blue Cross staffers can consult with the patient on where to receive certain procedures, showing the price at however many outpatient centers or hospitals are within a set radius of the patient. Hain said there are tools that allow patients to see the price they’ll pay under their plan, and see the price their employer pays. Initiatives like this trickle down to the providers, who will probably realize that they’re getting fewer Blue Cross patients if they’re priced higher than their competitors.
Mansfield said Methodist has doubled down on outpatient imaging centers, offering cheaper options in the communities in which the patients live. And there are the physicians themselves, who, as Walton put it, are working with their heads down, focusing on what the patient needs instead of, perhaps, what it costs.
Along with his role at Genesis, Walton is head of the TXCIN accountable care organization, which launched with more than 1,300 primary care and specialty independent doctors throughout North Texas. It helps steer these doctors toward payer contracts that pay for value instead of volume, spurring the physicians to do what they can to save money—avoid duplicative tests, refer to specialists that provide the best quality for the lowest price—in order to up their salaries.
“Independent physicians are coming together to say we want to drive a stake in the ground to participate in this,” Walton said. “And what’s so fascinating in this is that the big payers—Aetna, United, Blue Cross—have recognized that as well and given independent physicians contracts that reward value and not just volume. That’s huge. So now we have high deductible health plans for employees, and now we have reward systems for physicians in addition to reward systems for hospitals. A big opportunity.”
But waste and spending is only part of it. As Mansfield noted, hospitals account for about a third of the nation’s $3 trillion healthcare spend. And there are plenty of preventive lifestyle choices that consumers can make to cut into that and stay out of the system altogether. For instance, according to the National Institutes of Health, the annual price of medical costs and lost wages due to the treatment of the largely preventable Type 2 diabetes is $245 billion.
“When you have twice the level of disability in America of the 17 most developed nations outside of America at age 50, you’ve got a problem with public health,” Mansfield said. “I think the elephant in the room is us. We’ve got a long way to go, but that’s the real concern I have. We are not healthy. And we are becoming less healthy, and for us to try to fix that through the delivery system, at some point it just can’t be done. But we can improve.”