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‘High-Performance’ Health Innovators

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 or lower cost — than the conventional approach.

See also: High-Performance Healthcare Solutions  

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 allows continuous improvement. After more than 100,000 patient encounters with commercial populations, the data show that, compared with conventional orthopedic care, its 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-quarters 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% to 5% savings in total healthcare spending. True savings are generally higher.

Similar results are available within a variety of high cost sectors. Managing drugs can drop total spending 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, etc. 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 advisers 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 firmly in the interests of the health plan and the adviser, the benefits manager may be loath 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 spending, with better outcomes. That would be an offer that she couldn’t refuse, especially if her CFO heard about it.

See also: Healthcare Debate Misses Key Point  

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 U.S. healthcare system and represent a better way forward. If these high-performance modules 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.

High-Performance Healthcare Solutions

Benefits managers who rely on their health plans to keep costs down are bound to be disappointed. Despite health plans’ protests to the contrary, paying them a percentage of total expenditures is an incentive to make healthcare cost more, not less. The largest insurance companies have been among the market’s most profitable performers, with almost 500% average health plan stock price growth since 2009. Until health plans are at financial risk for better health outcomes at lower cost, reducing total spending will continue to translate to reductions in net earnings, a result clearly at odds with their business interests.

So for now, benefits managers interested in driving greater efficiencies are on their own. Their most promising opportunities are programs that deliver strong returns in health outcomes, productivity and savings. They can use their core plan for the basics. But then they can go around many of its programs, directly engaging instead with proven high-performance solutions compared with conventional health plan management.

The challenge is determining which risk management approaches will yield the greatest value. Should you invest in targeted, high-impact solutions (like drug management, musculoskeletal management, imaging management or reference-based reimbursement), or should you pursue the broader management inherent in a worksite primary care clinic?

See also: Healthcare: Need for Transparency  

Generally, the answer depends on whether you have a short- or long-term horizon.

For quick wins, many modular solutions have low-cost entry requirements and provide an immediate, powerful return on investment. For example, using an independent drug management firm in addition to your pharmacy benefit management arrangement can drop total healthcare spending by 7%. Musculoskeletal disorder management can save 5% to 10% off total costs with better health outcomes than conventional orthopedic care. Imaging management can reduce total spending by 5% to 8%. Reference-based reimbursement for hospital care can drop costs by 13% or more.

Other services — claims audits, surgical management, cancer care management, large case management, large claims resolution, dialysis management, cardiometabolic care management — can deliver similarly strong savings and health outcomes improvements right away. Often, the vendors are willing to financially guarantee results. Of course, prioritizing the solutions to pursue is a delicate process and should be informed by your population’s experience, health characteristics and the sponsor’s tolerance for plan disruption.

Plan sponsors with a longer view may want to consider a worksite clinic. Typically you’ll need to fund startup fees, the costs of establishing the physical plant and operational costs that are about 8% to 12% of current health plan costs. If you’ve chosen a capable vendor, the clinic may begin to save more money than it costs in the first 18 to 24 months. That said, be aware that Mercer survey data suggest that fewer than half (41%) of clinic sponsors can demonstrate savings, and the actual number may be lower than that. Identifying an effective vendor is critical, and the evidence is clear that most clinic sponsors and their consultants fail at that.

But let’s say that you have chosen your vendor wisely and that your clinic performs as hoped. (Some do!) This puts a comprehensive primary care practice in place at the front end of the system, conveying more control of patients and the care they receive throughout the continuum.

A clinic then becomes a platform that you can build on with a robust array of clinical and financial risk management tactics. These can include how co-pays are structured, managing referrals with high-performance narrow networks, or dispensing generic and therapeutic equivalent drugs directly into patients’ hands. It can mean handling many important, costly tasks more efficiently onsite, from imaging to managing diabetes or pain management. Seemingly small, thoughtful clinic design elements can have tremendous impacts on patient health and total cost.

High-performance modular solutions, like those we’ve described above, can also be integrated into a clinic to get much greater traction over high-value problems. Healthcare’s problems are tremendously complex, and many highly tailored solutions are necessary to hold excess in check. What’s more, just as it’s challenging to identify them and bring them together, it is equally difficult to coordinate and manage their implementation. Having a dedicated platform that begins with healthcare’s front end is a logical and powerful way to bring these solutions together and deploy them effectively.

See also: Optimizing Financing in Healthcare  

The real goal of a fully capable clinic with a full array of management tactics, is to change conventional care and cost patterns, driving appropriate care and, just as importantly, disrupting inappropriate care. Within two years post-implementation, we have seen good clinics dramatically improve the health of both individual patients and the patient population and reduce total health spending by more than 20%. Combining a good clinic with high-value niche solutions can produce even higher impacts.

Healthcare has become defined by rampant excess, so effective benefit managers will, of necessity, seek unconventional solutions. Established approaches are available now that will improve care and save considerable cost through clinics or high-value niches. As is always the case, success depends on being as knowledgeable as possible about the dynamics, choosing carefully and then holding all the participants accountable.

This article was written by Brian Klepper and Richard Sutton. The article was originally published on Worksite  Health Advisors.