Tag Archives: cracking health costs

There May Be a Cure for Wellness

During my tenure at both British Petroleum and Walmart, I tried various forms of wellness, but to no avail. There were never any savings, participation was low, employees didn’t like it, and administration was complex.

I’ve continued to follow the wellness industry but could never see any genuine success stories. The gratifying news is that I’m not the only one to notice any more. The Los Angeles Times called wellness a scam while Slate just recently called it a sham. And Al Lewis, my co-author on Cracking Health Costs, would say they’re being polite. Most recently, he has noted that the 2016 Koop Award is going to a vendor whose own data shows they made employees unhealthier.

See also: The Yuuuuge Hidden Costs of Wellness  

Speaking of Al Lewis, he has now entered the employee health field directly with Quizzify, which transforms the boring but long-overdue task of educating employees about health, healthcare and their health benefit into an entertaining trivia game. As a colleague and co-author, I have an obvious conflict of interest as I describe my impressions below, so don’t take my word for any of this. Just go play the sample short game right on the website, and ask yourself if you’re learning anything useful, right off the bat. Click here for a link to Quizzify.

Do you think your employees already know this stuff? It’s doubtful. Americans vastly over-consume healthcare; it’s almost free at the point of service once the deductible is satisfied, and they are being bombarded with ads and marketing, as are their doctors. Nothing can solve this massive problem, but Quizzify can help, and is about the only vendor even trying. Backed by doctors at Harvard Medical School and a 100% savings guarantee, Quizzify provides a plethora of shock-and-awe, “counter-detailing” questions-and-answers (with full links to sources) that will educate even the savviest consumers of healthcare and entertain even the dourest CFO. Nexium? Prilosec? Prevacid? You wouldn’t believe the hazards of long-term use. Then there is the sheer waste and possible harm of annual checkups, well-woman visits, PSA tests and so on.

Speaking of hazards, CT scans emit as much as 1,000 times the radiation of an X-ray. Uninformed people are going clinics that will give them a “preventive” CT scan. If a doctor suggested patients have a series of a thousand X-rays for “preventive” reasons, there would be a stampede out of the office.

On the other hand, there are instances where people should go to the doctor but don’t. Swollen ankles? Painless, perhaps, but you may have a circulation problem, possibly a serious one. Blood in your urine, but it goes away before you even make an appointment? That could be a bladder tumor tearing and then re-attaching itself, especially if you smoke. And show me one health risk assessment that correctly advises people over 55 or 60 to get a shingles vaccine if they had chicken pox as a kid.

Then there are the health hazards of everyday life. Those healthy-sounding granola bars are full of sugars cleverly hidden in the ingredients labels. And whoever says vaping is safer that smoking better not be pregnant, because for pregnant moms, incredibly, vaping could be worse for the unborn baby. Just as with the shingles vaccine, chances are your HRA is silent on the texting-while-driving (TWD) issue while obsessing about seat belts, but TWD is by far the more underappreciated hazard.

See also: Wellness Promoters Agree: It Doesn’t Work

Your HRA is probably also silent on the health risks of loneliness, poor spending habits, boredom and most of the other major health risks Robert Woods, PhD, and I describe in our book, An Illustrated Guide to Personal Health. Quizzify has many questions on spending habit, but, if I had one complaint, it would be that (at least in the questions I’ve seen) Quizzify doesn’t address these risks we’ve described in this book.

One of the largest health risks that workers have is being in a job you hate. You won’t see that question on anyone’s HRA either, or in Quizzify. That issue could lead to mass resignations in some pressure cooker companies.

Scores and scores of people have told me they fudge answers on HRAs, anyway. Interestingly, they feel they are on the ethical high ground to do that because of the goofy, nosy and intrusive questions they are asked to answer, e.g., asking about your pregnancy plans in the future. Quizzify, on the other hand, encourages people to cheat. Quizzify wants you to look up the answers because that’s how you learn. So instead of denying human nature, Quizzify channels it.

Conclusion: if you offer old-fashioned wellness, walk, don’t run, to the nearest exit. If you want to look at something that shows huge promise, check out Quizzify.

Healthcare: When a Win-Win Is Lose-Lose

“Workplace Wellness Programs Are a Sham“ is a good article in Slate by L.V. Anderson. This is a must read for people who remain true believers that workplace wellness will improve worker health.

“The idea behind wellness programs sounds like a win-win,” Anderson writes. Alas, history is full of “win-win” ideas that were destructive, costly or ineffective.

She describes the infamous “doublespeak” of Safeway CEO Stephen Burd’s description of success with Safeway’s wellness program. Anderson writes, “As it turns out, almost none of Burd’s story was true.” (Regular readers of my blog will know I’ve written about the Safeway nonsense before.)

For decades, everyone knew that an annual physical was a great way to stay healthy, but various studies, including the famous New England Centenarian Study, have exposed that as a myth, too.

See also: A Proposed Code of Conduct on Wellness  

Antibacterial soap, anyone? Sounded like a great win-win, no? The FDA finally outlawed it. In my book, An Illustrated Guide to Personal Health, written in 2015 with UNLV Professor Robert Woods, Chapter 4 was titled, “Avoid Antibacterial Soaps and Gels.” Why? “Overuse of antibacterial soaps and gels can reduce the effectiveness of antibiotics you may need someday…. They are helping create antibiotic-resistant germs.”

Back to wellness failures. Companies in the U.S. have spent huge dollars trying to keep employees healthy through methods that are shams. It’s time to move on.

I immodestly include the following quote from Anderson’s article: “You might think of Al Lewis, Vik Khanna and Tom Emerick as the Three Musketeers in the fight against wellness programs.“* Al and I are co-authors of the Amazon best seller, Cracking Health Costs. It describes flaws in typical corporate wellness schemes, which while profitable to wellness vendors are useless at best and can actually be harmful to workers health at worst, not to mention the inconvenience and costs of going to doctors for all that screening. Concerns about wasted productivity, anyone?

How can wellness programs harm worker health? One way is by promoting gross over-testing and excessive screening by tools that have very high error rates and rates of false positives, e.g., PSA screens.

One good byproduct of dumping your wellness program is to avoid all the costly and burdensome reporting ACA requires. Yet another good byproduct is letting your employees do their work at work instead of spending non-productive time every year in wellness lectures, filling out health risk assessments, reading wellness-related emails and brochures, etc., etc., ad nauseum.

How can “wellnessophiles” in companies truly believe that their employees don’t already know that smoking, overeating, lack of exercise and excessive consumption of concentrated sugars are not good for them? Do wellness proponents truly believe that the employees’ doctors haven’t already addressed those issues…not to mention public service announcements, health classes in high school and so on? Do proponents think their employees who smoke have never noticed warning labels on cigarette packs?

I meet a lot of people from various walks of life. Occasionally, I ask them if their employer has a wellness program and, if so, what do they think about it. The typical first reaction is they roll their eyes. The most common comment is that the company’s wellness program is “just another [insert unflattering adjective here] HR program.” That’s usually followed by comments best described as lampooning the programs, as in “you’re not gonna believe this but…” type of comments.

Interestingly, I meet HR executives who admit their wellness program are ineffective and costly, yet they cling to them. They usually give one of two reasons. One is that they don’t want to admit that their program is a big waste of money. Another common rational is some version of “Too many of our employees are unhealthy; we gotta do something.” (I put that in roughly the same category as, “the beatings will continue until morale improves.”) That line of thinking is bureaucracy at its worst. You would never spend your own money that way…or maybe they would?  Hmm.

I get asked, if not wellness then what? My reply is anything that might actually save money or get better care for your workers, e.g., centers of excellence and direct contracting with providers. There is some promising work on reference-based pricing and better pharmacy management. Also, I believe we may have a surge of international medical travel in the future, too, especially to places like Health City Cayman Island (HCCI), about an hour’s flight from Miami and one of the best-quality hospitals and clinics in this hemisphere. I have visited HCCI a number of times and met a number of their surgeons. They are excellent.

See also: EEOC Caves on Wellness Programs  

I tried various forms of wellness in my career of running large sell-insured plans. I tried to make them work, but in the end none of them were effective, and some actually drove up health costs in a way a steely-eyed CFO would quickly understand. For about half my career, I reported through the CFO chain, not HR. CFOs really get the numbers and ask the tough ROI questions.

HR executives, take note: You can increase your status and respect if you just get out of wellness. Again, it’s time to move on. While wellness at work was a noble notion and one that made sense to many on the surface, it’s time to “fess” up to your bosses. They will appreciate your message and appreciate the reduction of wasteful spending.

Tom Emerick’s latest book is An Illustrated Guide to Personal HealthFor further information on this topic, see the They Said What blog by Al Lewis and Vik Khanna.

healthcare cost

Why Healthcare Costs Soar (Part 5)

Readers of Cracking Health Costs know that healthcare is both complex and consuming, and an ever-greater share of GDP in the U.S., while our health outcomes are falling behind our peer countries.

According to the 2015 Health Care Services Acquisition Report, the deal volume for businesses in the healthcare services sector rose 18%, with 752 transactions in 2014, for a total of $62 billion; acquisitions of physician practices accounted for $3.2 billion of the total. As healthcare suppliers continue to consolidate, what does this mean for the employers who pay for these services?

With the attention around value-based contracts and affordable care organizations (ACOs), we should expect the number of ACO contracts will continue to expand beyond the 750 in existence today, and the value-based concept sounds good. But Dr. Eric Bricker’s blog pointed out that 41% of all physicians did not know if they participated in an ACO, as referenced in the Feb. 10, 2016, issue of Medical Economics magazine. Is there real motivation to change?

Hospital mergers lead to average price increases of more than 20% for care, while physician prices increase nearly 14% post-acquisition. The result: The value-based contracts will be based on higher fees for the combined entities.

In Part 3 of this series, the provider we mentioned built a strong reputation, which let it charge higher per-unit fees. But, when that provider enters into value-based contracts, renewals will depend on the ability to hit cost targets agreed on with the insurance companies. While the per-unit price in those contracts will be important, the Seattle provider’s biggest opportunity is to establish a more consistent process of care among its physicians, so employers stop paying for the wide variation in treatment and for unnecessary care.

Here’s what we know: 1) There has been value-based contracting, 2) there has been data to assess performance and 3) yet there remains extremely wide variation in care among providers, especially for patients with complex health problems. Where such variation exists in healthcare, many people are getting substandard care.

So why is there still variation? Well, if you sold a consumer product, like a flat screen TV, that had wide variation in results yet commanded a premium price and saw sales stay strong, how motivated are you to change your process?

With TVs, there is ample competition. Consumers will purchase another TV brand if one is over-priced or of poor quality. But, in self-insured benefit plans, most employers have not had the appetite to take tough but necessary steps to engage in disintermediation despite the huge differences in price and quality.

It’s high time for employers to replicate how purchasers in other industries have collaborated with their suppliers to address variations in process and quality and to eliminate cost inefficiencies.

Three Lessons on How to Chase Away Clients

If you don’t have time to read this now, remember one thing:  do NOT fine women $1200 for refusing to disclose on an HRA whether they intend to become pregnant.   Perhaps you think that is obvious but it isn’t to Penn State, which is doing exactly that

Until recently, human resources (HR) departments couldn’t get enough wellness programs.  They have been a gold mine for brokers, too, because high volumes of business have driven commissions that are not even subject to disclosure requirements. Vendors of wellness programs competed with each other to see who could offer the highest payouts to brokers and were not shy about admitting how aggressively they were trying to find new customers, even though every metric shows that wellness programs don’t work. 

All that changed when Penn State got into the wellness business.  Advised by Highmark and Truven Health Analytics’ Ron Goetzel, who oversees the now-discredited C. Everett Koop  award, Penn State implemented perhaps the most unpopular wellness program in history. The program triggered a change.org  petition and coverage in the Wall Street Journal , every HR department’s worst nightmare– except perhaps for unionization, which is now also on the table, partly because faculty were so upset about the onerous requirements imposed on them in the name of their health.

The program is laid out in Harvard Business Review, along with some sample reaction in the way of comments, so we won’t repeat that posting here.   Instead, the goal of this posting is the next step:  provide some lessons from Penn State for brokers and consultants, so that the problems at Penn State don’t happen to you.

Lesson One:   Employees matter in wellness.

Don’t assume that the HR department speaks for the employees.  In this case, the anti-HR outrage was overwhelming and could easily have been anticipated. Think twice before recommending a program that punishes employees if they don’t follow rules for improving their health—and that employees will hate. If your client is considering this type of program, ask which the company would rather have:   employees with high morale or employees with low cholesterol?

Lesson Two:   Forcing employees to “do wellness” will backfire.

Never recommend a program where completing forms avoids a forfeiture of a large sum of money.   People will just lie.  At Penn State, a memo went around encouraging people to lie.  So, instead of creating a culture of wellness, you’d be creating a culture of deceit.

In particular, as mentioned in the summary, Penn State decided it would be a good idea to fine women $1200 for declining to disclose to Highmark whether they intend to become pregnant.  This is the ultimate in “forced wellness.”  Indeed it is probably the worst idea in the history of wellness, and we mention it here only because if a large employer, well-known health plan, and prominent consultant can come up with this scheme, it ’s not beyond the realm of possibility that others might too.

Lesson Three:   Wellness numbers don’t add up.  Don’t pretend they do.

Wellness should be undertaken on its own merits.  If you, like Penn State and its advisors, cite the discredited bromide that 75% of cost is caused by chronic disease, you’re setting your client up to fail, as it is easy enough to find proofs that such a statement is meaningless.  Wellness actually increases costs, because biometric screens  and “preventive” physicals have very negative ROIs.

So what should you do instead?   Cracking Health Costs offers many solutions.  Chief among them would be narrow networks focused on a few safe, ethical national centers of excellence such as Mercy in Springfield (MO), where 80% of patients referred for back surgery are prescribed conservative treatment instead.  Also, coordinate care to manage employees who really do get sick, the so-called ”Quantum Health Model.”  Specifically, in lieu of conventional and ineffective wellness programs, pursue a well-being program of the type pioneered by Healthways.  

A combination of those initiatives should reduce your client’s spending while also keeping them out of the newspaper.

Five Principles For Cracking Health Costs, Dave Ramsey-Style

Dave Ramsey is a Tennessee-based Christian author and talk-radio host, who advises on personal finance. As Jewish Northeasterners, my husband and I aren’t exactly his target demographic, but we have remained devoted fans for over eight years. Ramsey takes a common sense approach to managing money, as he puts it “we give you the same financial advice your grandmother would, only we keep our teeth in.”

It’s time we applied such common sense to healthcare spending, and a much-discussed new book does just that: Cracking Health Costs: How to Cut Your Company’s Costs and Provide Employees Better Care, by Tom Emerick and Al Lewis. This book should be required reading for every CEO and HR executive in the country.  I’ve gleaned the following five commonsense principles from the book and from Ramsey’s radio show.

1. Give Every Dollar A Job

Ramsey says every household should have a budget and know where your money is going. Cracking Health Costs says that companies should get and count results for every dollar they invest in healthcare. The book gives a checklist of some of the numbers that employers should ask their vendors to report on, such as: inpatient days fallen, imaging tests reduced, wellness-sensitive medical events declined. You should know what your pharmacy benefit manager makes in profit and what discounts you get.

That sounds simple enough, but far too often vendors obscure their results with fancy reports showing all kinds of supposed savings, even when the math doesn’t add up. The reports often leave employers scratching their heads, wondering why despite all this elaborate “savings” they are still spending more money than they did last year. Don’t put up with that, says Emerick and Lewis. The book has some great advice on spotting phony numbers and asking the right questions.

2. Cut Your Spending

Ramsey says you should get fired up to attack wasted spending and reach your financial goals. Your family will be better off if you direct your dollars toward your priorities.

Emerick and Lewis also say you should attack waste and spend less – and your employees will be better off if you do it right.

Believe it or not, this is unusual advice. Most advice to business leaders worried about health costs focuses on creative ways to spend more money. Vendor PowerPoints are filled with new ideas for employer spendfests aimed at reducing costs: new prevention programs, expanded primary care, bonuses for performance, etc.

Cracking Health Costs points out the largest item on most company’s healthcare expense reports and suggests you start cutting spending there: hospital costs. The authors detail two approaches.  First, give your employees and dependents the opportunity to travel to preferred hospitals for your highest-risk, highest-cost procedures. Author Emerick helped some Fortune 100 companies pursue this strategy with good result, identifying “company-sponsored centers of excellence” with a propensity for correct diagnosis, appropriate care plans and top quality care.

Second, demand safety and quality from all the hospitals in your network, and make that available to your employees. Of course, I was pleased to read the book’s suggestion that purchasers use my purchaser-driven nonprofit, Leapfrog, as the (free) source of information on hospital quality and safety, including an app and search engine grading hospitals.  But employers can also work with Leapfrog and business coalitions to apply pressure on hospitals to improve. Emerick and Lewis point to Leapfrog’s calculator of the hidden surcharge Americans pay for hospital errors to get a sense of how much money is on the table for them. Here’s a warning for the faint of heart: the amount of your wasted dollars will likely have nine figures.

Don’t shy away from the Emerick/Lewis strategies for managing your hospital spend: estimates are that inappropriate treatment, misdiagnosis, errors, and poor quality care may account for as much as a third of health costs in the U.S.

3. Avoid Get-Rich-Quick Schemes

Ramsey warns: if it sounds too good to be true, it probably is. Do the research.

Cracking Health Costs skewers the pay-now-save-later schemes sold to employers every day.

Some of those too-good-to-be-true ideas sound both good and true — or none of us would ever fall for them. Cracking Health Costs cautions employers on a number of programs that, structured poorly, can cost employers money, save nothing and produce zero demonstrable health advantages to employees. This includes certain kinds of screening programs, triage phone lines, health coaching and health risk assessments (HRAs) with incentives for participation.

Many of the very same vendors selling these programs know the truth about their ROI. As the authors point out, “Not one single publicly held company in the business of controlling medical care expenses actually provides financial incentives for their own commercially insured members to complete HRAs and talk to coaches.”

4. Be Generous and Giving

Ramsey advises people to set aside money for charity – even on a tight budget.

Cracking Health Costs proposes that companies focus on proving to their employees that they care about them — through generosity and actions that demonstrate concern.

There’s research behind this. The authors point to the Gallup-Healthways Well-Being Index and studies suggesting that companies that improve performance on the index can correlate with improved company performance. Healthways is a leader in this emerging field. And it appears from the research that a caring employer can significantly impact employee well-being.

Indeed, Ramsey too recommends a similar business strategy. He’s as hard-nosed a businessman as you get, but his book EntreLeadership attributes his company’s success to a culture of generosity and caring.

Ironically, poorly-executed wellness programs can undermine employee well-being. In part because of new provisions in Obamacare, today many employers are requiring that employees pay extra for their healthcare premiums if they refuse to participate in wellness programs.  Like it or not this sends a nefarious message from employer to employee: you, dear employee, are a depreciating asset, a drain to the bottom line, too stupid to know how to take care of yourself so we have to pay you to do it. This, of course, contradicts the message known to promote employee well-being, that your employer cares about you and values your service.

Penn State is learning this the hard way. They invested in an employee wellness program and withheld dollars from those who refuse to participate, no doubt hoping to show employees how deeply they care about their health. That’s not the message employees heard: they see it as Exhibit A of the pernicious motives of their employer—and this is an employer that really doesn’t need bad publicity right now.

Indeed, talented employees don’t depreciate over time, their contributions to the company improve as they accumulate experience. Talent is a precious asset to companies, the key to competitive advantage and essential to success—it should never be squandered to save a few (phantom) bucks on future healthcare premiums.

5. Your Best Financial Hope — And Your Greatest Financial Obstacle – Is In The Mirror 

Let’s face it, most of us at least once failed to stick to a budget or blew money on a dubious idea. How do we overcome our human tendency to defy common sense? Ramsey’s advice: Get fed up with yourself.  Get mad.  Passion is the key to change.

Similarly, Cracking Health Costs urges benefits executives to get mad. You are being taken to the cleaners. And worse, your employees may be suffering harm as a result. To succeed, benefits executives must not delegate their leadership to the usual bevy of vendors and health plans any more than you let your credit cards and bank supervise your personal finances. Executives that seize control of their health spending – and apply common sense – will honor their employees and thus help their companies succeed.