Here we are at the beginning of the Fourth Quarter and the only October surprise that most employers are seeing is associated with their employee healthcare costs. Large employer’s surveyed by Business Group on Health (BGH) expect health plan costs to rise 5.3% in 2021. In projecting possible scenarios for 2021, consultancy PwC suggests the possibility that avoidance of care during the pandemic in 2020 could drive the medical cost trend up by 10%.
As we move through another season of renewals with increasing costs, we move into another cycle of “grin and bear it” while we look ahead to more of the same. Some advisors propose carve-outs, caps, cost shifts, and high deductible plans that either punt the issue down the road or directly into the employee’s hands. All the while, we wring our hands and point at health systems, insurers, PBM’s, and drug manufacturers as the root of all evil.
The 4th Quarter
Yeah, it’s the 4th Quarter, we’re down with time running out and asking ourselves once again: “Why do we continue to play the same game?”
Like it or not, as employers, we are in the healthcare game. And, in most cases, we continue to lose as costs rise, employee health (mental and physical) gets worse, and we feel powerless to affect either. We didn’t intend to be in the healthcare game but here we are, realizing just how challenging it really is. Again we ask: “Why do we continue to play the same game?”
Imagine what would happen if we approached our health plan costs like a market opportunity. First, we’d vet the opportunity. How big is the opportunity? What will it cost us to enter the market? Do we have a differentiated solution? What does the competition look like? How do we position against alternatives? Who do we put on the team to help us make it happen? Are there products or services out there that help us? What does the financial model look like? How do we win?
Necessary Evil or Opportunity?
The problem with an expense like healthcare is that we approach it as a necessary evil. We approach it as someone else’s game complete with rules of its own. We don’t really want to play but we have to, so we lace-up, jump-in, and do the best we can – knowing that we won’t win but must press-on regardless. Often, we find that we don’t even have the right equipment, right knowledge, right players, or right strategy to play it effectively. Every twelve months, we revisit it, hoping something changed but knowing the score before it even hits the board.
However, there are also opportunities in the healthcare game. We just need to make it our game. We need to take the same strategic view of it that we bring to any critical initiative. A longer term, strategic perspective demands a broad view of the challenges as well as an understanding of the opportunities. Then, it needs to be coupled with a multi-year approach complete with short-term and long-term tactics. We have to acknowledge that employee health is a long game, that we are in it, and that we can play it our way.
Consider this: according to the BGS survey referenced earlier, employer healthcare spending per employee for 2021 will be $10,850. In addition, the CDC estimates that productivity losses related to personal and family health problems cost U.S. employers $1,685 per employee per year. Even aside from the direct financial impact, employee health is a major strategic factor for employers. It’s a game that we need to master.
A Long Game Approach
If employee health is strategic and healthcare is a game employers have to play, how do we go about approaching it differently than what we’re doing today? Here are a few ideas on how we, as employers, can change the game:
- Understand your current state
- Gather data
- Know your population
- Identify where direct costs are occurring today
- Look for actionable insights – data by itself is not helpful unless it can lead to a decision or action that can make a difference.
- Consider and quantify the implications of maintaining the status quo
- Build a plan
- Employee health is a long game – plan for the long game.
- What is the vision for your game? What is your philosophy toward employee health: attraction, retention, productivity, and healthcare as a competitive weapon?
- Set near and long term objectives. Cost savings, health measures, procedure/episode avoidance.
- Determine options
- Talk to experts. If they don’t bring new ideas, move on. Don’t outsource the process, find ways to leverage others’ bright ideas.
- Invest in it appropriately. This needs to match the vision. Is employee health just a necessary expense or do you see a deeper purpose there? Start with the money that is currently being invested and work backwards. You should be able to get more for less.
- Understand incentives. Behavior is driven by self-interest. That doesn’t mean that someone else’s self-interest can’t align with yours, you just need to understand where it does and where it doesn’t.
- Look in new places. Don’t accept the fallacy of limited options. There are more options than ever.
- Assign ownership. Make it strategic – just like other priority initiatives. Someone or a team needs to be accountable.
- Recognize that the plan must be fluid. Accept the fact that things will change and anticipate it.
- Expect it to be complex. There is no “easy” button for employee health. You will need creativity, endurance, and sophistication to make a difference. If this is too much, just accept the rising costs – your organization probably doesn’t have the will to change its healthcare game.
- Anticipate complexity but don’t boil the ocean. Your plan must be creative but don’t expect it to answer every contingency. Walk the path. Plan it out. Don’t thrash here for too long. You need to execute.
- Execute. An 80% plan aggressively executed in a timely fashion will outperform the 100% plan that never gets off the ground.
- Put some “doers” on the team. They are not always the ones who built the plan. You know this game – it can’t be talk. It has to be action. You may need a couple of folks who are willing to break some glass. Make it happen.
- Manage to the milestones. Accountability is critical. Push down the path with focus and intention. Assess, adjust, and keep pushing.
- Be prepared to pivot. Things will change. Give yourself enough time to assess but anticipate the need to adjust, frequently. To this end, look for relationships that give you flexibility. Multi-year contracts are designed to maintain status quo. Make sure they give you the ability to react and adjust when necessary.
- Celebrate success. Whatever your measures, share the successes and highlight the progress. This is good for the healthcare mission as well as the culture.
- Sustain the effort. Long term plans are difficult to sustain. Continuity of leadership, persistence of effort, and commitment to the mission of change are critical. It’s ok to measure monthly, quarterly, or yearly successes or even setbacks, however, the longer mission horizon has to be kept in view.
- Innovate. As important as it is to innovate in your core business, it is also important to innovate in your approach to employee health. You may find that this happens quite well within your team. More than likely, you’ll find that you need to continue to bring in new ideas from the outside. Be intentional with finding new ideas.
- Make healthcare a core competency. Over time, you will get good at healthcare. Great! Ultimately it needs to be a core competency. The rewards are significant. Helping your team members become the best version of themselves is simply good business. Helping them manage through the difficulties of life is also good business. Your organization will always be only as good as the team within it.
- Additional thoughts on changing the game:
- Get closer to the point of care. Employers need clinic relationships to extend their influence. No, you won’t deliver care, however, as the primary payer, the employer needs to influence how that care is delivered.
- Start with the high cost areas. Don’t accept “it is what it is.” Stratify patients and plan to address problem areas systematically.
- Find partners who can help you identify and execute on actionable insights. If they shrug when you ask how they would recommend solving a problem, then move on.
- Contract directly. Whenever you use someone else’s network, there is a layer of cost involved. Whenever someone else manages your money on your behalf, there is a layer of cost inserted. There are hospitals, medical providers, physical therapists, behavioral therapists, and pharmacy providers who will work directly with you. Own those relationships.
- Don’t fall for the RFP approach. I recently heard a broker claim that she had vetted 20 different PBM’s for a particular client. That approach is counter productive. To evaluate multiple options, you have to develop a standard of measure. That standard of measure may help compare but it doesn’t help identify new ideas and only supports the status quo of “been there, done that.” It is great to explore options, just make sure you are getting new ideas in the process. Remember, these processes will almost always default to “status quo.” Inertia keeps vendors in place as well as stale ideas.
- Get out of the artificial driver of annual renewals. The process itself drives toward a structured decision and only reinforces the RFP and standard features approach. This is the world of incremental gains (maybe) and doesn’t align with the need for a multi-year strategy. Get partners who will go the distance with you and adjust with you as ongoing changes demand. What has the process yielded for you recently? Probably 5-10% cost increases. Why do we need to invest so much effort in this process every year? Focus on the bigger issue: improving employee health rather thrashing in administrative processes.
Employee health is a long game. Who’s version will you play? The current status quo world of rising premiums, misaligned incentives, backroom commissions/rebates, and short-term, “easy button” health plan management continues to yield rising costs with little improvements in health or productivity. As the stewards of significant resources invested in our plans today, we have the responsibility and the opportunity to do more. Will we keep playing someone else’s game or will we rewrite our playbook and play our game?
