On its face, it is strange that U.S. employers provide healthcare coverage for their workers. Shouldnt a tire manufacturer concentrate on making tires, not healthcare decisions?
Yet, the tradition of employers providing coverage for their employees is well-established in this country. U.S. employers commonly view healthcare benefits as a critical way to attract and retain a quality workforce and ensure workers health, productivity and loyalty. It is part of the unwritten but very real social compact between corporations and their communities, and most employers are firmly committed to maintaining this compact. And from most every opinion poll, people like receiving health insurance benefits through their employers.
Having made this commitment, however, employers are frustrated with the healthcare industry. The wide disparities in the quality and safety of care have been well-documented by the Institute of Medicine, the Agency for Healthcare Research and Quality, Dartmouth Medical School researchers, the RAND Corp. and many others. Costs have been rising faster than the rate of general inflation for years. And now, the findings of Modern Healthcares inaugural Healthcare Purchasing Power Survey reveal, among other things, shockingly wide variations in overall healthcare expenditures and in expenditures per employee among some of the nations largest companies.
So if costs vary as widely as quality and safety, whats an employer to do? Too often, unfortunately, we start by looking for someone to blame.
Its so easy to point fingers. Thats what we did when the nations economic crisis exploded earlier this fall. It seems everyone has a favorite scapegoat: speculative investors, lax regulators or greedy lenders. The only thing that fluctuated more wildly than the stock market was the list of probable culprits.
Likewise, the employer community has also done a fabulous job of pointing fingers at everyone else. Its the health plans fault for not staying on top of the hospitals; its the hospitals fault for not maintaining quality. The truth is, the finger of blame has to be pointed first at ourselves.
Thats not the state of affairs today. Many business leaders tend to know their business and only their business, and are so focused on their own product lines that they feel they cant understand healthcare. It may be unreasonable for the chief executive of that tire manufacturer to know the ins and outs of healthcare policy. Executives already know that healthcare costs are a problem, but the idea that they can actually do something about those costs is novel to them. Instead, they rely on their vendorshealth plans, pharmacy benefit managers, benefit consultants and othersto act on their behalf.
Clearly, a cultural change is in order. If we employers are serious about pursuing real health and healthcare reform, we need to be fully engaged with our healthcare vendors in pursuing that reform, not merely passive participants.
Revisit that tire manufacturer one more time: Its very likely that the company spends nearly as much on healthcare as it does on rubber. Corporations tend to monitor the behavior of their vendors of raw materials very closely to ensure theyre getting the best value for their dollars. So should it be with healthcare.
As in every economic transaction, employers above all seek valuethat is, the highest possible quality at the lowest realistic cost. We demand value from our employees and from our raw materials vendors. We are only starting to understand how to demand the same from our healthcare vendors as well.
One thing weve come to understand is that we cant do it alone. Health plans are our agents in the field as we seek to implement value-based purchasing. Theyre the ones that have contracts with providers; theyre the ones collecting data on performance. Therefore, employers want and need a strategic partnership with their health plans.
But while we rely on health plans as a key agent, are we really telling them what we expect?
Were starting to. The National Business Coalition on Health has developed an information-gathering tooleValue8that uses a standard annual survey to help establish benchmarks in areas such as adoption of provider payment reforms, value-based benefit designs, health information technology, member and provider communications, disease management, provider performance measurement, patient safety, pharmacy management, behavioral health and financial stability. The goal is to give business health coalitions, their purchaser members and national employers a means to assess and manage the quality of their healthcare vendors.
Its not such a radical notion that employers should assess and manage the quality of their vendors. But in healthcare, employers have been far too timid. We havent made our expectations clear.
One of the reasons we created the eValue8 tool was to be more explicit about those expectations, to become more assertive. Were not trying to create a relationship in which were at odds with our healthcare vendors. Its precisely the opposite: Were trying to align strategies between employers and health plans so were all following a common path forward. Put simply, we need to work closely with health plans to achieve a truly value-driven healthcare system.
In the coming months, well hear a great deal from Washington about healthcare reform, and of course well monitor these discussions closely. But we in the employer community wont wait for action from the federal government. Instead, well work with our vendors and do our part to advance healthcare reform ourselves, letting valuethe intersection of high quality and low costbe our guide.