Can Technology Lower Health Care Costs?
Feb 24th, 2010 | 16 responses
Can technology lower health care costs? George Pantos, Executive Director, Healthcare Performance Management Institute, former deputy undersecretary of Commerce, and former general counsel to the Self-Insurance Institute of America, raises the issue in a must-read op-ed in The Orange County Register. Here’s a small part of it:
With his health care overhaul stalled, President Barack Obama has challenged America to come up with alternatives. “You got a better idea? Bring it on,” he recently announced. A televised summit meeting on health care ideas is scheduled for Thursday, Feb. 25.
A suggestion. Why not focus on streamlining health costs by harnessing technology that allows companies to take control of their healthcare expenses?
Businesses generally lack the data necessary to measure and manage their health costs, even though health care often represents their second- or third-biggest expense. Indeed, executives have a better sense of how much money they spend on office supplies than they do of where their health-plan dollars are going. But with the cost of health benefits projected to increase 7 percent in 2010 — and to double over the next seven years — businesses can no longer afford such willful ignorance.
Some firms have a stake in preserving the costly status quo. Look no further than the insurance industry, whose top five companies recently announced record profits that were 56 percent higher than last year’s. Insurers’ business models are largely based on keeping American firms in the dark – that is, preventing them from analyzing their own health care data and using the results to find alternative benefit structures that may offer better outcomes at lower cost.
Companies have tackled customer relations and supply-chain management with technology-driven strategies. So why not do the same for health benefits?
Go to the link to read the rest — and the details.
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16 Responses to “Can Technology Lower Health Care Costs?”
Joe,
Most of the big insurance companies already have this technology. George Pantos must have been sleeping for the last 5 years. Companies already offer gaps in care coverage where they report back to the individual's doctor is the individual doesn't refill prescriptions. They also offer coordinated prescription review so that if one doctor prescribes a medication that will adversly affect another (prescribed by a different doctor), the doctors or pharmacist are alerted so they can better coordinate medication. At the company level, most of the information Mr. Pantos wants is already available, too. From the 30,000 foot level down to the weeds, if a larger company (150 employees or more) really wants this information, it is available, especially if they are self insured. HIPAA does limit the amount of information that can be shared. The law of large numbers has a floor wherein an IC cna't divulge certain statistics, but it is there. I am a broker and I see presentations like this all of the time.
I think he is suggesting that companies which purchase healthcare insurance should have this power, so that they can better cater plans to what employees are using? If that is a correct reading of it, there would be enormous privacy concerns.
It might be an item many companies don't want to tackle, especially smaller ones. Having to address employee healthcare concerns directly could possibly lead to some worker problems that they are more happy to outsource.
Just speculation on my part though.
Absolutely correct, Greg. I've been buying self-insured administered through CIGNA for 10 years and have been shown the usage and p&l reports every year at renewal which allows me to set co-pays, company contribution rate and covered benefits. Naturally, the excess and agg cap and admin fee is what I can't control the pricing on except through a rebid process.
there would be enormous privacy concerns.
Exactly. Although Pantis suggests collecting info in aggregate, he then recommends applying it to individuals. It is not the place of an employer to bug employees to make sure they take their herpes meds, get pap smears, etc. I don't even like the idea of employers identifying employees at risk for heart disease, diabetes, etc. It's really none of their business and conceivably could impact on promotions, job assignments, etc.
I know of two kinds of information that would be enormously useful, but are generally not available:
1. Aggregate information about the cost and effectiveness of procedures for given circumstances. For example, how effective is “radioactive seed” treatment for prostate cancer for a 50 year old man compared to not getting treated at all, what are side effects and their likeliness, and what would the normal costs be.
2. Provider costs and effectiveness. Right now, it's easier to compare crawl space repair companies (an unusual and sometimes complicated repair) than it is to compare hospitals for common surgeries.
The technology is more and more expensive, as a rule.
Totalitarianism in the name of cost control or “lifestyle” social engineering is not a valid alternative.
“Why not focus on streamlining health costs by harnessing technology that allows companies to take control of their healthcare expenses?”
I've been posting the link to the following report for a number of years now. Why is this a surprise now?
Those of you who are covert (or overt) social engineers and are enamored of this, I hope you're laid off.
[PDF file on the following page]
http://www.corsolutions.com/resources/papers/in…
What Pantos seems to be saying is give the tools and technology to the entity paying the bills….the ones who have the most to gain when they manage their own expenses…not the insurance companies or others who help a company annually “procure” their healthcare plan.Companies manage all aspects of their business daily/weekly….not healthcare. It's not because they dont want to, it's because they dont have the timely information to make decisions. I dont want to know how much the services cost that I used, I want to know first what is driving the cost, where are there problems, what can I do about it, how do I engage those that may be mis-using the plan and if I implement strategies to reduce these healthcare costs-how do I then regularly measure it. Are you all saying that the insurance companies do this? Are you saying that obtaining raw data that isnt understandable in the first place and may be received every quarter or 6 months or possibly even right before renewal achieves this goal? In addition groups that are already self funded rely on others- carriers or administrators to pay claims….these entities rarely manage the costs….and if they do, in most cases, revenue streams for those entities are kept in tack, rather than real cost savings provided back to the business footing the majority of the health plan costs. Pantos is on point.
The big insurance companies could care less about the health of a client organization just about as much as you, as a broker, cares. These “programs” are what we call wallpaper. They look nice but do nothing of value, because they are not set up to save money but to look like they are cutting edge and create a new revenue source. If the carriers were really doing this then why are all of your clients still receiving 7%-35% increases year after year?
Carriers are paid on the volume of claims. They are not in the business of helping organizations become efficient and healthier. They build networks and pay claims. You as a broker know this well. You are paid based on the dollar value of your clients benefit, not on what you do to help lower cost or improve outcomes. If you, as a broker, were aligned with your clients and not the carriers, who pay you back end commissions based on the volume of business that you place with them, you would take the time to look at real technology solutions out there that help organizations manage their risk and opportunities in order to make the organizations members better consumers of health care and lower cost. That will not happen because all you are concerned with is keeping the status quo and incrementally increasing your income each year with the increases that you deliver you clients under the guise of increasing costs of health care.
You are just like every other broker out there, interested in what is best for you. You are reading from the carriers cheat sheet of excuses on why its not us its them.
Without a consistent real-time data feed with Business Intelligence Tools and a data warehouse to model and identifying risk, on an aggregate basis, you can not even start to manage your health care plan to better outcomes. Without an engagement strategy and incentives the participation rates in wellness will be scanty at best as they are now with carrier run programs.
Health care is a shared responsibility of both the employer and the employees. The reason why so many companies are reducing benefits or dropping coverage all together is that it is unaffordable because Jimmy is not taking his meds and then goes to the emergency room for congestive heart failure. Is it the organizations responsibility to pay for some thing that was easily identified with technology and mitigated with a little proactive outreach? All of these kinds of programs are initiated by third party organizations on the organizations behalf and do not identify individuals health data to the paying organization . They are really providing an additional service to there employees at no extra cost, to the employees, that in the end lowers the cost of health care for everyone.
“Health care is a shared responsibility of both the employer and the employees.”
No, it is not. It may be a cost, so long as we have an employer-based health insurance system for many as well as the insurance model for health care. But it is not the place of employer, nor, for example, government, to assume a “responsibility” for employees' health care decisions and acts, or any “lifestyle” acts. That is improperly intrusive and leads to being totalitarian. (For the federal government do to what some support or even seek with employers, is to be worse than any Lawerence Welk, Stepford Wives jibes or more extreme fears of “blue laws” and religious-right extremisism from a Religious Right federal government. Left-wing “lifestyle,” “food,” “exercise” “policy” activism is more totalitarian as more repugnant.)
The other people besides employees and non-employees (not everyone has health insurance through their employer) involved in health care are the insurers, government as possible or actual regulators, and of course the people in the medical field. Or at least, those are the rightful people.
Health care is not a right. Without the shared responsibility aspect being understood and accepted by organizations and their employees costs will continue to rise until organizations shift the majority of cost on to employees or drop the coverage all together. This is a simple function of cost inflation. Without comprehensive real time data employers are at the mercy of carriers with little or no competition to keep them in check. Without comprehensive real-time data organizations can't even measure what is working well and where to focus support services. If the average increase year over year is about 8% and will double in the next decade, the status quo is unsustainable. Companies can not increase the prices of their products or services by 8% every year to offset the increase in cost. The only alternative is to shift or reduce. You say that it is not the organization's business to get involved in the personal lives of the doctor patient relationship, and I agree that no one should get between that. I do, however believe that employees have a minimum responsibility to be compliant with what the doctor recommends or to accept outreach from third parties hired by the organization to provide support, wellness, and disease management services. These services are provided be registered nurses and doctors that work with their doctors to ensure compliance and better outcomes. The average doctor visit is 7 minutes. Patients routinely forget 50%+plus of what their doctor has told them by the time that they reach the car.
If the data tells an organization that there are 10 people at the organization with a 60%+ chance of having a catastrophic claim in the next 12-24 months are they just supposed to accept that cost and lost productivity or should they be proactive and provide services to the employees get to a better healthier place which in turn dramatically lowers overall cost and cost inflation trends?
The ROI on this approach ranges from 4-1 to more than 30-1 depending on the severity of the organizations problems and the incentives that are put in place.
“Health care is not a right.”
I'm not saying that it is.
“shared responsibility aspect”
It's not others' business. That way leads not only to excessive collectivism but to totalitarianism.
What you're missing is the basic logic. The real problems lie with insurance as an employee benefit that has come to be expected (it is not a right or anything that “should” accompany employment any more than a pension or retirement pay or benefits from companies in any form — government welfare-state activists at least have a more intellectually sound position underpinning their alternative) and with the insurance model for pre-paid, normally comprehensive health care.
“I do, however believe that employees have a minimum responsibility to be compliant with what the doctor recommends or to accept outreach from third parties hired by the organization to provide support, wellness, and disease management services.”
This is none of the employer's place. Not even if government nanny-state (“cost-conscious” as well as PC) people want to use employers as materialistic-paternalistic allies, when not handy surrogates and auxiliaries. (Health care and “lifestyle” is not the only such threat.)
What “outreach”? (Therein lies a threat, from both employer and government. At least, again, the government proponents have a stronger position intellectually — they're open and proper where collectivism and totalitarianism should be directed or controlled.)
This is between the doctor, the patient, and other medically related people.
“Patients routinely forget 50%+plus [...]“
That's no excuse for micromanagement (and more, and worse).
“If the data tells an organization that there are 10 people at the organization with a 60%+ chance of having a catastrophic claim in the next 12-24 months are they just supposed to accept that cost and lost productivity or should they be proactive and provide services to the employees get to a better healthier place which in turn dramatically lowers overall cost and cost inflation trends?”
The health plan is supposed to deal with this, not management. Management will, if faced with costs it shouldn't be bearing, use it as a guide to firing or layoff decisions, as well as in the future for screening prospective new employees and making hiring decisions.
To do this to people, for reasons not affected to the needs of the employer for the employee or due to the employee's performance or conduct, is wrong. The real solution is simply to eliminate the grasp on companies, as well as the obsolescent, “lifetime paternalistic employer of lifetime never-moving, permanently cared-for employees” dinosaurish relic it is, of employer-based health insurance (something real health care reform currently by Congress and the Obama neglects to a great extent in trying other, more grand things) and make the insurance market fully separate (with state-wide pools, exchanges, and such, with or without “community rating”), as well as to prevent abuses like this, which the Matria white paper pointed immediately at the moment I saw it years ago. I'm not disputing it's not easy to identify and select high-cost (and low-cost) employees by methods like these. But this kind of employment and livelihood-related thing is not
welcome, but ugly, in the real world. Anyone realistic knows what “Predicting High Cost Members” enables in the modern work world (especially not only during tough economic times but when management gets rewarded monetarily for lowering costs through getting rid of employees).
http://www.corsolutions.com/resources/papers/in…
I've normally had individual insurance most of my years, not employer-based health insurance, which is dying like unions, and I also have a pre-existing condition and am aware of all the multiple problems and complications associated with health care and with insurance. (I am also pro-capitalism but have seen a good deal of misconduct by employers as well as by employees in our real world.)
In a perfect world this information would never be used against individuals, but its not. However, the vast majority of organizations do not and would not want to know who the individuals were, even if this were legal. That is precisely why organizations use carriers or third parties to do this kind of data collection and outreach. It reduces the temptation or employers to use this information for evil. The problem is that the carriers have no incentive to lower claims or cost because this would lower profit and future revenue.
“organizations use carriers or third parties to do this kind of data collection and outreach. It reduces the temptation or employers to use this information for evil”
The information is there. Not only can it, but it likely will, be used, eventually. All it takes is temptation or pressure.