Tag Archives: leapfrog

How to Help Microinsurance Spread

Microinsurance is an industry that keeps building momentum. Changes in the global economy have created an emerging middle class that has been underserved by traditional insurance models — and microinsurance offers a needed solution.

For people in developing countries, who in many cases live on just a few dollars a day, traditional insurance is too costly. Constrained finances and limited awareness act as a significant deterrent for purchasing traditional, risk-mitigating insurance products. However, when loss events like those stemming from Hurricane Maria or workplace injury occur, insurance is necessary to rebuild communities and individual lives. Considering that nearly 6.5 billion residents live in emerging and developing countries like Ghana, the Philippines and Vietnam, the scale of this opportunity exceeds virtually any other single opportunity in mature insurance markets.

Much of the (re)insurance market’s recent attention has centered on global natural-catastrophe losses, which have exceeded $500 billion since 2017. Many communities around the world were dramatically affected by these losses, forcing prominent insurers to understand the best way to serve those communities.

Why Micro Makes Sense

The increased buying power within these developing communities confirms there’s an opportunity for microinsurance to grow. A World Bank study found that, from 1985 to 2017, Vietnam’s per-capita GDP jumped by nearly 10 times from $230 to $2,343. Such gains encourage significant interest and investment specifically focused on microinsurance product development.

Allianz, for example, has doubled down on its commitment to the field by joining forces with FPT Group to build insurance products for Vietnam and purchasing micro insurer BIMA for $290 million. In addition, LeapFrog raised $400 million for microinsurance product development and distribution, proof that sophisticated parties believe in the value of microinsurance products.

For new markets where skepticism toward high-premium private products exists, microinsurance offers a low-cost option to mitigate risk and grow trust with corporate insurance brands. However, when viewed in the aggregate, there remains a mismatch between high-growth areas in terms of population and income — Latin America and the Caribbean, Asia and Oceania and Africa — and insurance penetration in these areas, which currently sits at only 7%.

See also: Microinsurance: A Huge Opportunity  

The challenge for investors and the insurers they support is simple: educating communities, developing relevant products and establishing trust in these products; all of which is typically expended before the first premium dollar is collected. The challenge is exaggerated by the high-volume, low-margin nature of individual products, which, in some communities, carry average microinsurance product annual premium of $14.

While the economics of microinsurance will continue to challenge penetration and premium capture, insurers can overcome significant hurdles related to education and distribution by presenting simplified and relevant products to prospective insurance customers, and developing and executing a distribution strategy through a multidisciplinary team.

How Insurers Can Solve the Microinsurance Quandary

Insurers can position themselves for success in the microinsurance market through a couple of different approaches.

Chief among those is to streamline their services. Microinsurance is a product of its time. Technology allows all kinds of consumer services to provide hyperpersonalized care, which means insurers need to offer products that are as simple and relevant as possible.

To accomplish this goal, insurers must keep the end user in mind during all phases of product creation. Companies need to understand what customers need, how they prioritize those needs, and where their gaps in coverage lie. By identifying these factors, insurers can offer products that clearly spell out the relevant advantages to customers. This clarity can help engage customers and increase the odds that consumers will purchase the coverage.

Customers don’t want to pay for coverages they don’t need. Insurers, therefore, must seize any opportunity to create granular products that are simple and affordable. Not only does this approach provide more useful products to buyers, but it also helps insurers limit how much information they must collect during underwriting.

Additionally, insurers should build cross-functional teams internally to assist with distribution. Getting the right insurance product to the right customer at the right moment takes a coordinated team of experts. Those who distribute these products need to understand the environments in which they sell and have a stake in the profitability of the product.

See also: Microinsurance and Insurtech  

These distribution partners must also learn to describe to consumers the differences among products. It is not enough to sell: Distributors must be educators who teach customers that insurance can be as trusted as the local brands they know and rely on. To do that, the distributors and the people they serve must be supported through association with charitable and regulatory organizations.

Finally, technology must be leveraged to effectively monitor and mobilize the distribution force and insureds alike. To that end, software developers must build and test features on the basis of real customer feedback and adapt quickly to optimize the products. When the back-end team gives distributors a product that people want, distributors can sell a product that brings clear and tangible benefit to the developing world.

Microinsurance will continue to grow as the needs of the global population continue to evolve. Everyone in the insurance industry, from distributors to developers, is responsible for overseeing the growth of this new niche. Only by collaborating to offer a relevant product will insurers successfully earn their share of this new and burgeoning market.

Wellness Isn’t the Only Scam in Healthcare

Healthcare meets Network.

That is the one-sentence summary of Dave Chase’s new book, A CEO’s Guide to Restoring the American Dream: How to Deliver World-Class Healthcare to Your Employees at Half the Cost.

Dissecting the title, the “restoring the American Dream” reference is as follows: While wages have barely budged in the last 20 years, employee compensation has risen quite a bit — with most of the increase being the health benefit. Dave’s observation is that if the health benefit were managed much more tightly, wages could climb noticeably for the workforce without increasing the total employee compensation budget.

As for “half the cost,” that number may be overstated…but not by much. For instance, I just saw a wellness vendor send 2/3 of a company’s employees to the doctor because they have “conditions” they didn’t know about, that this vendor “discovered” by — you guessed it — screening the stuffing out of them by flouting clinical guidelines. This employer could save about 3% simply by firing the vendor and not consigning all those employees to the treatment trap. (Of course, there has been no measurable improvement in outcomes from all these doctor visits.)

This employer and others could save another 0.5% simply by not insisting that their employees and spouses get annual checkups (and “well-woman” visits) because as readers of this site know, they have no value. The good news is that checkups are not likely to harm employees, which is more than can be said for many wellness programs.

See also: Wellness Vendors Keep Dreaming  

So we are already saving 3.5%, and we haven’t even done anything hard yet, where “hard” is defined as “something that does not delight employees, like getting rid of ‘pry, poke and prod’ programs.” In other words, “hard” isn’t really hard.

Slightly harder opportunities

In addition to an expose on wellness, Dave Chase exposes some scams that make wellness look like child’s play. (Wellness is child’s play, in the sense that any fifth-grader knows more arithmetic than a wellness vendor. And a 14-year-old knows more about BMI.)

In no particular order, we’ll start with PBMs. Their stock prices have exploded — literally, 300-fold — in the last 30 years.  You think they achieved that growth honestly? They make wellness vendors look like Boy Scouts. They obfuscate everything, with “rebates” and “formularies” and under-the-table payments from drug companies, and all sorts of other things that we probably don’t even know about. Here is a New York Times article that casts just a little light on the subject…but more than enough light to indict the entire industry.

It isn’t easy to ditch a PBM, but increasing numbers of alternatives are popping up. A good rule of thumb is, the thicker the contract with your PBM, the more you are getting ripped off.  I invite folks who offer one of these new alternatives to add a comment at the bottom of this posting or on LinkedIn following this posting.

Then there are the carriers, who typically make more money, the more money gets spent. The number of scams is mind-boggling. For example, consider Dave’s explanation of what happens when a claim is overbilled:

Another fee opportunity is so-called “pay and chase” programs,
in which the insurance carrier doing your claims administration
gets paid 30-40 percent for recovering fraudulent or
duplicative claims. Thus, there is a perverse incentive to tacitly
allow fraudulent and duplicative claims to be paid, get paid as
the plan administrator, then get paid a second time for recovering
the originally paid claim.

Good luck trying to ferret your own claims data out of carriers so that you can do your own analysis on them and change policy accordingly. I do quite a bit of work for top-flight carriers, measuring their wellness-sensitive medical events. They always seem to have the data at their fingertips. We can complete the analysis for the year within weeks after claims run-out ends, meaning sometime in April. Meanwhile, I’ve got a Fortune 50 client whose carrier, Optum, still hasn’t managed to provide them (at an extra fee!) with their own event rates for 2016, a delay which more than coincidentally will make it impossible to implement any cutbacks in Optum’s services for 2018 if the event rates show that — hang onto your hats — Optum didn’t achieve anything.

Don’t get Dave started on providers, who find highly creative ways to snooker employers and employees.  Like staffing in-network facilities with out-of-network doctors, who then bill patients ridiculously high charges. You need to re-contract with your carrier and put that one on them.  Or, if you’re large enough, recontract with the hospital.

And speaking of hospitals, why have Leapfrog D- and F-rated hospitals in your network at all? If a geographic necessity, then at a minimum educate your employees that it might be worth the extra drive to avoid some major complications.

Providers also bill companies what they think they can get away with, rather than what a buyer would expect to pay given what others in the area are charging. Because the company is generally not the decision-maker (the employee or doctor generally decides where to go, not based on price), providers often get away with it. An entire chapter is devoted to provider pricing scams and the importance of transparency.

See also: A Wellness Program Everyone Can Love  

Or, my own personal favorite provider scam, disguising emergency rooms as urgent care centers. (A rather naively idealistic Colorado legislator tried to make freestanding ERs disclose that they are not urgent care centers, but the provider lobbyists prevailed.)

A sidebar: Quizzify trains employees to be on the lookout for these scams, which is helpful for the 0.1% of the 150,000,000 commercially insured employees who actually have access to the quizzes. The other 99.9% are on their own.

And yet it all comes back to wellness

Employer obsession with wellness has caused them to take their eyes off these many other balls, because wellness was supposed to solve everything (including industrial waste, according to HERO stalwart Bruce Sherman). Truly, wellness has been the Maginot Line of healthcare cost containment strategies. While a vastly disproportionate share of resources has gone into wellness, PBMs, carriers, providers and various middlemen simply circumvented these efforts, to dig right into your pocketbooks.

I can only scratch the surface here — just go out and buy the book, and then you’ll understand both why when it comes to scamming employers and employees, wellness vendors have a lot to learn, and also why you should be mad as hell and not take it any more.

Why Healthcare Must Be Transparent

The economics of American healthcare is undergoing a profound shift. Employers, policymakers and other purchasers are increasingly paying healthcare providers based on the benefit to the patient. For instance, the Centers for Medicare and Medicaid Services, (CMS) the agency that runs Medicare, adjusts payments to hospitals based on how well they perform on measures of patient experience, readmissions and patient safety. Private payers, too, are increasingly negotiating contracts tied to quality and safety performance.

Understandably, the changes to payment heighten sensitivity among hospitals and doctors about how their performance is measured. Even measures that have been exhaustively tested and validated face new levels of scrutiny when money is on the table. Many providers even call for delaying the changes in payment until measures can be perfected even more.

But employers and other purchasers of healthcare are determined to move forward with new payment standards without delay and will not await measurement perfection. After decades of enormous investment in healthcare with little or no accountability for quality, purchasers place a high value on understanding quality and don’t intend to reverse course and continue simply paying for everything. Employers and purchasers do not intend to return to the days when consumers had no information to make an all-important decision about which hospital to use, and purchasers paid the bill regardless of the quality of the patient experience. Purchasers want numbers, figures and rates on safety, quality and cost, calculated with vigilance, responsibility and respect for science. After decades of hard work and research, this is finally available to them.

See also: Not Your Mama’s Recipe for Healthcare  

Transparency has been the key to change. According to a multi-stakeholder roundtable convened by the Lucian Leape Institute of the National Patient Safety Foundation in 2015, “During the course of healthcare’s patient safety and quality movements, the impact of transparency – the free, uninhibited flow of information that is open to the scrutiny of others – has been far more positive than many had anticipated, and the harms of transparency have been far fewer than many had feared.” The effect is so dramatic, the report concluded, that “if transparency were a medication, it would be a blockbuster.”

The report cited my organization Leapfrog’s first-ever reporting of a measure of maternity care, early elective deliveries. These are deliveries scheduled early without a medical reason, and they pose risks to the mother and the baby, and frequently result in babies unnecessarily starting life in the neonatal intensive care unit. There had been many efforts in the past to curtail these unsafe deliveries, but it wasn’t until Leapfrog publicly reported rates by hospital that significant progress was made. In just five years, the national mean dropped from 17% to 2.8%.

Transparency has also accelerated reductions in errors and accidents that kill or harm patients in hospitals. The 2014 estimates from the federal Agency for Healthcare Research and Quality’s Medicare Patient Safety Monitoring System, which reports patient safety indicators, show progress in reducing hospital-acquired conditions, including a drop from 28,000 inpatient venous thromboembolisms in 2010 to 16,000 in 2014. This means 12,000 fewer patients in 2014 developing potentially fatal blood clots. It is very unlikely that we would have achieved a reduction of this magnitude without transparency.

Measurement and transparency do not have to be perfect to achieve remarkable progress in quality improvement. We see this in more transparent industries outside of healthcare every day. For instance, researchers studied the recent initiative in Los Angeles to issue safety grades rating the hygiene of restaurants and found it associated with a nearly 20% decline in hospitalizations from foodborne illness in the program’s first year. The composite grade used in LA was fairly rudimentary by the standards of measurement scientists in the healthcare industry, but the grade was nonetheless effective in educating consumers and galvanizing improvement.

Providers and health care executives sometimes point to flaws in their medical record and billing systems as problems that should delay the use of certain measures. However, public reporting is often necessary to break logjams in data collection. For instance, New York state’s public release of surgical mortality data for coronary artery bypass grafting procedures jump-started the movement to define and more carefully collect the procedure outcome data. Providers will get better at data collection when the data is used.

See also: Is Transparency the Answer in Healthcare?  

Current healthcare performance measures may not be perfect, but good people are working hard to steadily improve their validity – and that work should be done in the sunlight of transparency. Employers will gladly work collaboratively toward that end, as long as the work continues without delay. We have all waited too long for transparency and sensible payment, and the cost in human lives and suffering is already too high.

A Hospital That Leads World on Transparency

Jeremy Hunt, secretary of state for health in Britain, recently toured the Virginia Mason Medical Center in Seattle. He said the visit was “inspirational” and announced plans to have the British National Health Service (NHS) sign up “heart and soul” to a similar culture of safety and transparency. Hunt wants doctors and nurses in NHS to “say sorry” for mistakes and improve openness among hospitals in disclosing safety events.

I had a similar reaction to my tour of Virginia Mason. The hospital appears impressive—and truly gets impressive results. My nonprofit, the Leapfrog Group, annually takes a cold, hard look at the hospital’s data and named Virginia Mason one of two “top hospitals of the decade” in 2010. Every year, it ranks near the top of our national ratings.

Virginia Mason’s success is rooted in its famous application of the principles of Japanese manufacturing to disrupt how it delivered care, partly at the behest of one of Seattle’s flagship employers, Boeing. There are numerous media stories and a book recounting the culture of innovation Virginia Mason deployed to achieve its great results, so I won’t belabor the point here. But at its essence is Virginia Mason’s unusual approach to transparency. Employees are encouraged to “stop the line” – that is, report when there’s a near miss or error. Just as Toyota assembly workers are encouraged to stop production if they spot an engineering or safety problem, Virginia Mason looks for every opportunity to publicly disclose and closely track performance.

It is not normal for a hospital to clamor for such transparency. Exhibit A: the Leapfrog Hospital Survey, my organization’s free, voluntary national survey that publicly reports performance by hospital on a variety of quality and safety indicators. More than half of U.S. hospitals refuse the invitation of their regional business community to participate in Leapfrog, suggesting that transparency isn’t at the top of their agenda. But for Virginia Mason and an elite group of other hospital systems, not only is the transparency of Leapfrog a welcome feature, but they challenge us to report even more data, faster.

I hope the British health care system takes Virginia Mason’s model and runs with it, but, more than that, I hope the model takes hold here in the U.S. Too many hospitals in the U.S. avoid disclosing their performance instead of welcoming transparency as an opportunity to build trust with the patients in their care.

The movement toward transparency has a long way to go. We do not have publicly disclosed accreditation reports, even though those reports are tickets for hospitals to obtain public funding through Medicare. We do not yet know enough about infection rates, sentinel events, medication errors and outcomes including death rates from many common (or uncommon) procedures. Price transparency is also rare, according to a report by the Catalyst for Payment Reform.

The ultimate example of our tendency toward non-disclosure came last week, when USA Today reported that CMS quietly removed from public disclosure the incidence of certain “never” events, like objects left in after surgery. Experts disagree on the merits of how CMS counts these “never” events, and CMS—no doubt influenced by lobbyists—believes that they aren’t fair to hospitals. Yet, in a culture of transparency, CMS would do the opposite: first err on the side of reporting the “never” events, then let the experts refine the measure over time. Indeed, as the Virginia Mason experience demonstrates, the very act of reporting can accelerate improvement and transformation.

It’s time for the U.S. to ignite its passion for free speech and lead the world in applying it to health care.

Three Surprising Hazards of Worksite Wellness Programs

Here's a proposal for the plot of a new comic book.

Perry White summons Clark Kent and Lois Lane into his office one day in Metropolis.

“I have bad news,” White barks. “Health costs at the Daily Planet are through the roof. And it's all your fault. You're unhealthy!”

White tells Clark and Lois to fill out a questionnaire, which he assures them will be kept “private.” Once they complete it, they will receive free advice on running their personal lives better. “And we're docking your pay $1,200 if you don't fill it out and see a doctor,” White warns.

The questionnaire asks about smoking, exercise, weight, feelings of depression, financial problems, marital problems and stress. Clark's questionnaire asks whether he examines his testicles regularly. Lois must answer whether she plans to get pregnant. And they get lots of valuable guidance on their misguided lifestyles. Eat your vegetables. Cheer up. Calm down. Don't smoke. Pay your bills on time.

Though he can leap tall buildings in a single bound, Clark, according to the questionnaire, needs a number of tests and screenings to rule out serious health problems.

I probably couldn't sell this comic book proposal because the scenario sounds too preposterous, even for a guy with X-ray vision who flies. Surely, in real life it would be illegal or at least politically incorrect for your boss to demand to know your most private information, obtained under the threat of a pay cut.

Sorry to say, this plot isn't entirely fictional for thousands (if not millions) of Americans. Not only is it actually legal for your employer to require you to answer intrusive personal questions, it's encouraged by a little-known provision in Obamacare, which is embraced by a surprising mix of people and interests on both sides of the aisle. That provision allows employers to promote “worksite wellness” programs and require their employees to pay up if they don't participate.

A multibillion-dollar industry has grown up overnight, selling wellness programs to well-meaning employers. More than 90% of all large employers report offering one for employees. Some of these programs are excellent and welcomed by employees. It's nice for an employer to support exercising and quitting smoking.

But badly designed programs are not so nice, as Matthew Woessner learned. He received an email from his employer on July 17, 2013, instructing him to take the online questionnaire called a “Health Risk Assessment,” reporting on his personal life and habits akin to Perry White's grilling of Clark and Lois. Like the Daily Planet employees, if Woessner refused, he would lose $1,200.

This could happen to you, according to Al Lewis and Vik Khanna in a disturbing new book, “Surviving Workplace Wellness…with Your Dignity, Finances, and (Major) Organs Intact.” The book is so laugh-out-loud funny you may wonder if it's really serious, but actually it's a sobering exposé of hazards in the worksite wellness trend in American business. Think of the book as Dave Barry meets Rachel Carson.

The authors agree that the worksite wellness movement is not only a privacy hazard, but a health hazard and business hazard to boot. While some of us might be willing to tolerate a certain amount of privacy loss if we thought it would improve our health and save some money, Lewis and Khanna make a compelling case that poorly designed wellness programs don't help at all. In fact, these programs in the wellness business: 1) dismay and alienate employees, 2) fail to reduce health costs and 3) harm employee health.

How is this possible? Let's look at each in turn.

1. Dismaying and Alienating Employees

Bad wellness programs send the message that your boss thinks you're an idiot. This typically isn't a good strategy for improving morale, though it does improve motivation to update your resume.

Woessner's employer is a good example. That employer tells employees who smoke that tobacco use is not healthy. This implies that employee smokers are not educated enough to recall the Surgeon General's warnings or the mountains of studies over the past 50 years. Woessner's employer also believes that a good number of workers are too simple-minded to understand they should eat their vegetables and get some exercise.

What kind of company employs such a dim workforce? In Woessner's case, it is Penn State, which employs some of the world's leading researchers in science, technology, social sciences, humanities and health care. Despite their apparent stunning lack of knowledge about the most fundamental aspects of their health, a disproportionate number of them managed to earn PhDs.

Of course, the reality is that public health is a complex enterprise for which it is very easy to condescend and coerce when you mean to encourage. Bad wellness programs focus on the former.

2. Bad Programs Don't Save Money

Lewis and Khanna show examples of wellness vendors inventing savings numbers to sell their services to your employer. (I dare anyone to get through this section of the book without laughing.) Wellness marketers make claims that literally don't add up, such as proclaiming savings exceeding 100% (mathematically impossible) or, similarly, suggesting an employer saved more money than he spent in the first place.

Fundamentally, Lewis and Khanna make a compelling case that bad wellness programs don't save money because the programs themselves cost money, and the added cost of screenings and education and other services aren't free, either.

3. Potential Harm to Employee Health

Even if wellness programs may cost a bit more money in the short run, surely they improve health in the long run…right? Unfortunately, that's not evident either, the book argues.

Lewis and Khanna give us a case study of the state of Nebraska, which touts the success of an employee wellness program that won the national C. Everett Koop Award. The book shows convincingly that, not only are the proclaimed savings numbers impossible, but Nebraska's employees may have been exposed to hundreds of unnecessary and invasive tests. Many resulted in false positives that demanded even more invasive tests and treatments, which can scare patients for no reason and even lead to additional risk and harm.

I recommend this book because your employers – and the vendors and consultants that sell to them – aren't going to change without your input. Employees and business leaders need to do what the Penn State staff did and push back on poorly designed programs. In the process, they will be supporting, not undermining, the economic wellbeing of their employer.

Many of us may be reluctant to question the design of our company's wellness program because it sounds like we are challenging Mom and apple pie. How can you oppose something as pure-sounding as employee wellness? But what this book warns is that poorly designed wellness programs can violate the very essence of good management practice: namely, that management should focus on employee performance, not employees' personal lives. The latter can do much more harm than good.

A well-designed wellness program does not threaten to dock Superman's pay if he doesn't get a cholesterol test. A good one might instead add a salad bar to the Daily Planet cafeteria. The latter doesn't sound like something Perry White would do, but after all the Chief has never been the model of a good boss.

I don't come to this conclusion about the problems with wellness programs lightly. I worked in public health and dedicated much of my career to promoting prevention. My belief in the importance and the difficulty of prevention is precisely why I believe we must call out poorly designed programs that prey on well-meaning employers and other purchasers. Those programs apply equal measures of coercion and disparagement toward the people they are supposed to help. That discredits employer benefits programs and undermines employee loyalty and trust. Employers deserve better for the investment they make in the wellbeing of their employees.

This article first appeared on Forbes.com.