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A new model to reduce healthcare costs

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A new model to reduce healthcare costs

  1. 1. A new partnership model for health systems to expand market share through reducing employers’ healthcare costs Thomas W. Brink, TWB Resource Group, Inc. February 2015
  2. 2. What if…  You could increase your market share, by…  Being seen as the health partner that…  works with business to improve the health of their employees.  works to reduce the cost of healthcare for employers making them more profitable 10/26/2015 2
  3. 3. What will employers be looking for in the next five years? 2013 18th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care  Partnerships with healthcare providers who are aligned with the business needs of employer  Employer value proposition – their business needs  Reduction of healthcare costs  Improved healthcare outcomes  Employers do not buy the argument that high cost healthcare equals quality  Employers see the healthcare system and its unwillingness to aggressively manage expense as the reason for the high cost of healthcare. 10/26/2015 3
  4. 4. Employers are NOT looking to health systems to create value. 10/26/2015 4
  5. 5. Why employers do not look to a health system for help 10/26/2015 5
  6. 6. Why should health systems market to employers isn’t patient satisfaction enough?  Employers are the largest provider of healthcare coverage in the United States  Due to the ACA 2018 “Cadillac Tax” and smaller profit margins due to a poor economy employers are looking for ways to reduce their healthcare costs  The health system that partners with employers to reduce their healthcare cost will see and increase in market share and volume Coverage Covered in millions Employer health plans (‘13 US Census Bureay 169 Medicare 49.4 Medicaid 2014 69
  7. 7. Employers are looking for means to reduce costs  Cost shifting to employees – HSA’s, higher deductibles  Restricting choice  Narrow networks  Onsite clinics  Wellness – focused on those who currently spend the least. Seeks to keep them from moving to high cost members  Chronic disease management – focus on the high cost members
  8. 8. Health systems talk health not dollars  Healthcare providers have been trained and focus on improvement of individual and population health  Business focuses on the bottom line – profit. Although they may reference the need for better health among their employees they want to see tangible cost reduction.  Health systems focus on wellness, clinical compliance and disease management. Although this is good from a healthcare perspective, health systems fail to show a direct correlation to these efforts and reduction of actual healthcare claims cost of the employer  Claims cost is the real measure of cost reduction for the employer as it affects the employers healthcare premium and whether or not they can become self insured or have to remain fully insured.  A self insured employer accepts more risk and therefore has a lower cost. In order for the employer to accept this risk and go self-insured the employer must have definitive assurance of controlling healthcare cost.
  9. 9. Population health  In any given commercial group population 5% of the group accounts for 70% to 75% of the claims cost  Identifying and focusing on this 5% of the population is the quickest way to show cost savings for the employer  Traditional wellness programs focus on the 95% of the group that use 25% - 30% of the healthcare cost. Although the argument is used that this prevents future cost by preventing this group from entering the 5% of chronic high cost users, there is little financial evidence to support this approach.  Also, since the average length of time that an employee stays with an employer in the US is 5.4 years, the employer paying for the wellness does not realize the financial ROU on the wellness benefit – the employees next employer does.  Traditional approaches also may focus on a specific health condition, e.g. diabetes, hypertension, obesity. This approach is based on health providers training to focus on specific health conditions. Individuals with specific health conditions may be in the 5% or 95% of the population. Addressing a specific health condition does not correlate to a direct reduction in claims expense.
  10. 10. Where are healthcare dollars spent Health Status Health Spend 5% High Risk Complex Multiple disease 20%-35% Rising risk Conditions currently under control 60% - 75% Low Risk Healthy 60% - 75% 20%-35% 5%
  11. 11. Traditional approach spends most of the wellness effort on those who use the lowest amount of the healthcare $. ROI = minimal benefit Traditional Wellness Approach 5% Effort Expensive Disease TX 20-30% Effort Often uncoordinated care resulting in transition to complex diseases 60% - 75% Effort Health assessments Biometric screening 40%-50% of pts have to PC relationship Health Spend 60% - 75% 20%-35% 5%
  12. 12. Recommended approach devise programs aimed at those who spend the largest amount of the healthcare $ ROI = maximum benefit New Approach Produces highest ROI Health Spend 60% - 75% 20%-35% 5% • Chronic disease management – risk stratification, intensive case management • Onsite clinic – reduces ER visits and pharmacy cost coordinates care • Onsite clinic • Health coaching • Biometric screening Hlth assess Bio screen Wellness Ed Onsite
  13. 13. Population Health Management – a business ROI based approach  Risk stratification – identify the 5%/25%/70% spend  Design specific programs  5% = 70% of spend: Special chronic disease management team (Provider – MD/NP; nurse; pharmacist; diet; behave health: onsite clinc  25% = 25% - 35% of spend: Monitor disease condition, coordinate care; onsite clinic  70% - 5% - 10% of spend: Support healthy life style  5% = 70% of spend has highest ROI for programs not the 70% where most wellness programs are directed.  2013 Rand study showed no statistically significant savings on wellness
  14. 14. Rand 2013 study on the effectiveness life style management programs showed no significant cost savings for employers – Disease management programs have 8 times the ROI as lifestyle management programs
  15. 15. Rand 2013 study identified that if an employer wants an immediate impact on healthcare cost, disease management programs should be implemented. The most effective “on the ground” disease management program can be done with an onsite clinic
  16. 16. New model: onsite medical home which coordinates care and expands primary care involvement. True medical home Onsite clinic EE’s Coord care Primary Care Wellness Pop Hlth Mgm
  17. 17. Case example 1: Onsite Medical Home Clinics achieve cost savings - XYZ established an onsite clinic with a nurse practitioner and medical assistant. In 8 months XYZ reduced its loss ration from 140%+ to less than 70%. This resulted in reducing annual premium increases of 30% - 40% to less than 5% for a three year period. 17 Onsite Clinic Opened 10/26/2015
  18. 18. Case example 2: Southern IN company has 500 EE’s. Onsite Clinic established stabilizing healthcare cost allowing the company to move from fully insured to self insured. 125 175 225 275 325 375 09-2005 to 08-2006 09-2006 to 08-2007 02-2008 to 01-2009 02-2009 to 01-2010 03-2010 to 02-2011 03-2011 to 02-2012 03-2012 to 02-2013 03-2013 to 02-2014 2014 Annualized Company X Health Plan Total Cost PMPM Onsite clinic started
  19. 19. Case example 3: Chronic Disease Management Intervention Programs (CDMI) CDMI is a process of intervention with employees experiencing multiple high cost chronic conditions due to their unhealthy lifestyle. That 5% of any employee population that utilizes 60% - 70% of the healthcare dollar.  Healthcare employer with 3,000 covered lives  From 2008 to 2012, CDMI participant claims decreased by 14.9%.  Claims were reduced $659 Per Member Per Month. 10/26/2015 19
  20. 20. 10/26/2015 20
  21. 21. Employer Services Approach Employer customer Employer Services (branded under Health System) Chronic disease mgm Health System Services provided based on assessed needs of and requested by the employer insurance product Other Onsite clinic Occupational Health
  22. 22. Key employer services  Occupational health – all employers required to have by state law. Entry service to employers for the health system  Onsite primary care and occupational medicine – large employers (500+ employees) can cost justify. Brings care to the customer versus making the customer come to healthcare  Chronic disease management – focuses on the 5% of high cost utilizers. Works well when done within and onsite clinic  Insurance product: When an employer’s healthcare cost is managed, the employer can reasonably accept more risk and therefore reduce his cost associate with a wholly insured plan by moving to self-insured.  If the health system has an insurance or TPA product they can work with the employer to bid down the employer’s health plan administration cost.  Even if the employer does not choose the health systems plan, the health system is see as a factor in helping the employer reduce the cost of the health plan administration.
  23. 23. Progression of services - summary  Assessment of employers employee population to determine the best approach to reduce cost. Analysis of claims, wellness data and other clinical data  Development of programs to address the employers goals.  Most likely goals  Reduce healthcare costs  Improve health and productivity of employee population  Implement services to address those employees with most serious conditions. 70% of cost  Onsite clinic, chronic disease management program  Implement services to address employees with rising risk. 25% of cost  Onsite clinic, close monitoring, Rx assessment, Rx compliance, coordination of care  Implement services to address employees with good health. 5% of cost
  24. 24. Questions? Discussion 10/26/2015 24

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