Hospitals also struggle with benefit costs

Just a couple of months into a newly focused effort to contain the costs of healthcare coverage for its employees, Summa Health System in Akron, Ohio, already is having preliminary conversations with other employers about how they can do the same.

“They're all very interested, I would say, and anxiously awaiting to see how this works,” said Mark Terpylak, president of NewHealth Collaborative, Summa's accountable care organization.

The steps Summa is taking—from specialty disease management programs to embedding an employee-dedicated nurse in its network—have been a couple years in the making. Some changes in that time have led to “fairly small” cost increases in the 4% to 5% range, Terpylak said, but he wants to see that fall to zero.

Through a holistic approach started Jan. 1, Summa aims to completely flatten its health care costs this year.

About 90% of employers face increases in the premiums they pay for employee health plans, according to the 2015 Arthur J. Gallagher & Co. Benefits Strategy and Benchmarking Survey. And with nearly one in four companies seeing double-digit rate increases, employers are searching for ways to keep those increases in check. Hospitals are not immune to the rising costs of providing their employees with health care coverage. And some see their approaches to flatten costs as translatable to other businesses.

The Cleveland Clinic already has commercialized its wellness offerings and is considering doing the same with its benefit plan design, which has saved the Clinic about $75 million since 2010, said Paul Terpeluk, medical director of the Clinic's employee health services.

University Hospitals began offering commercial ACOs after seeing success with such a model for their own employees, said Nate Hunt, UH's ACO director.

“I think employers today are struggling like everybody, right?” he said. “Healthcare costs are unsustainable, and they need help managing those.”

Terpeluk said hospitals may not be the best place to find these new approaches, with a lot of energy focused on other regulations and requirements. Many haven't taken the time to step back and focus on employee costs, he said, adding, “It's an afterthought right now.”

Rick Chelko, president of The Chelko Consulting Group of Westlake, Ohio, which consults large employers on health plans, also questioned hospitals' ability to find solutions to the soaring costs of benefits and blames increasing access — from telemedicine to more emergency rooms — for rising costs.

But those who do address the issue in creative ways could have successes, he said. It's much easier for hospital systems to try certain tactics than it is for an employer with hundreds of locations across the country.

Others note that hospitals have some flexibility to fine-tune approaches and tweak programs to find what works best.

Terpylak said it was time for Summa to translate what it applied to its Medicare ACO to its own employees.

“We've realized we've kind of had some success and feel a little bit more comfortable in the Medicare space,” he said. “But what is it we can do for commercial populations? How do we prove that out? How do we refine it? How do we evolve it? And frankly, there's no better way to do that than with our own associates.”

Employers' efforts thus far to contain costs haven't been particularly successful, as is evident by the rising costs, Chelko said.

“Costs continue to go up at a much higher rate than the general consumer price index, and it eats up more and more of both the corporate expense dollar as well as individuals' take-home pay,” Chelko said.

In Gallagher's study, which surveyed more than 3,000 organizations nationwide, respondents were asked what strategies they use to mitigate health care costs.

“It's been the same answer for a long time,” said William F. Ziebell, executive vice president of Gallagher's north central region, which includes Cleveland. “The top two strategies are 'We're going to shift costs to the employee and we're going to go out and shop for a plan.' ”

These aren't sustainable, Ziebell said. Instead, Ziebell suggests two broader strategies: mitigating risk through defined contribution and engaging employees in wellness initiatives.

As director of wellness in employer services at the Clinic, Jennifer Hunter's entire role centers on figuring out the engagement piece.

She takes lessons on engagement the Clinic has learned in working with its own employees and helps other organizations create a culture of health. A significant portion of the businesses she works with are within the health care industry, but her clients range broad from retail to finance to manufacturing.

Engagement is a puzzle for many employers who offer wellness programs, but attract only a fraction of employees to participate.

Terpeluk believes the answer is incentives.

“You can appeal to people's greater sense of self and all that stuff, but at the end of the day, people have to have some incentive,” he said.

Clinic employees who have one or some of six identified chronic conditions (high blood pressure, high cholesterol, diabetes, asthma, overweight or smoking) are encouraged to join disease management programs.

Their participation and success in the programs are directly linked to how much they'll pay in premiums, which the Clinic levels in bronze, silver and gold plans. Bronze is the basic, silver is for those who join a program and gold is for those who meet established health goals. Gold can save a family up to $1,000 a year.

Healthy employees can also see these savings by proving they're participating in certain activities.

“Most companies have wellness programs now,” Terpeluk said. “They just don't tie those into things like benefit design and driving down health care costs.”

Additionally, the Clinic offers free membership to different programs, such as Weight Watchers and Curves — in addition to its own fitness centers — to remove the financial barrier at the front end.

UH also offers financial incentives for employees who are focusing on their health. Individuals are paid up to $600 a year in the form of paycheck bonuses for taking steps to improve their health.

Activity levels, health education classes, preventative care, tobacco cessation classes and weight and nutrition management classes can all help employees earn that incentive.

This year, UH is adding increasing heart rate (measured through a wearable device) to the options. Next, it's trying to see how to add community engagement, a form of mindfulness, to a more holistic look at ways to earn that bonus, Hunt said.

Terpylak said Summa designed specialty disease management programs and removed financial barriers for people to get preventative care. For those with certain chronic conditions, Summa has tried to reduce copays, such as keeping insulin free for diabetics.

The system also hired a registered nurse dedicated solely to the employee population. The nurse is embedded in the network and can coordinate needs.

Having leadership on board with wellness is key, Hunter said, citing the Clinic's decision to stop hiring smokers and to remove sugary sodas and candy bars from campus vending machines.

“I think that most employers feel a deep sense of responsibility to the health and wellbeing of their employees,” Hunter said. “It doesn't mean it's easy to accomplish, but I think the commitment is there.”

She sees time and time again a desire but no path to a health employee population. Engagement, and figuring out how to measure that, is vital.

“Culture eats policy every day of the week,” she said.

The trick is figuring out a way to embed health in the vision, mission and values of a company, much like safety is at the core of manufacturing companies.

“It's how do you make health and wellbeing systematic in a culture, so that the healthy choice is valued and easy,” Hunter said.

Hunt said it's simply the right thing to do for employees. By extension, that's the right thing for patients, said Elizabeth Hammack, associate general counsel and strategic adviser for UH.

“We have a population of people who are caregivers, who are devoted to the mission of University Hospitals, of taking care of patients,” she said. “And we need to make sure that they also take care of themselves, so making sure that they have all the tools that they need to do that.”

By the second year of its employee ACO, UH had people asking how to replicate that. Hunt said UH has seen a lot of growth in the past two years in its commercial ACOs. Today, about half of its 300,000 ACO members are through commercial structures.

As Summa works through this year, officials will be able to quickly figure out what works, what doesn't and what new opportunities exist, Terpylak said.

“And as we fine-tune that, then it's a very easy discussion with other employers in the marketplace about how to structure both their benefit design, build in some value-based incentives and plan design features, and realize that the opportunity for lowering the employers cost of care for their employees is working with an integrated coordinated delivery network,” he said.

"Hospitals also struggle with costs of benefits" originally appeared on the website of Crain's Cleveland Business.