Robert FrombergEditor-in-Chief, HFMABenjamin Franklin listed 13 virtues necessary to “succeed in life with good character.” The list included virtues such as frugality and moderation. The virtue he had the most trouble achieving was order.
Franklin defined order as “Let all your things have their places; let each part of your business have its time.” He wrote, “I found myself incorrigible with respect to Order,” both in terms of controlling his schedule and “with regard to places for things, papers, etc.”
However, Franklin’s actions belie his assertion that he found order “extreamly difficult to acquire.” Franklin’s many accomplishments—including this list of virtues and the systematic way that he tracked his efforts to improve himself in these areas—demonstrate a more important dimension of order than keeping a neat desk, a dimension that is crucial for leaders: the ability to identify, communicate, and act on a clear organizing principle.
In health care, an example of a powerful organizing principle is structure, process, and outcome, the scheme identified by Avedis Donabedian in his work on improving healthcare quality. The orderly ideas in these simple words have helped frame the thinking of a generation of people devoted to providing excellent health care.
An organizing principle like this has an intellectual component, but is more than an intellectual exercise. It is a clear expression of a person’s nature—a cousin of personality and vision. For example, a pragmatic person would tend to organize thoughts into a process. An analyst would tend to look for classifications, comparisons, or causal relationships. A poet might organize thoughts around analogies. A politician might organize ideas around argumentation or persuasion. A natural learner would process information inductively. A natural teacher might process information deductively. Another way of saying this is that there is no right way to organize ideas, but it is crucial that such an organizational scheme exist.
I thought about the idea of order, organizing principles, and leadership the other day while listening to HFMA’s 2006-2007 Chairman Joe Fifer address a group. Fifer held up Consumerism in Health Care, the most recent PATIENT FRIENDLY BILLING® project report, and told the group that the five guiding principles in the report are an ideal way to organize our thinking and actions related to the many tentacles of consumerism.
I thought about the idea again while reviewing the content of the forthcoming January issue of hfm magazine, which focuses on leadership.
One example is in the cover story by Jeni Williams, which is titled “How Does Your Leadership Rate?” The organizing principle demonstrated by the leaders interviewed for this article might be called inputs and outputs. The article suggests that true leaders have an unquenchable thirst for inputs—information wrung from virtually anything, from a television program to a colleague’s comment to a formal study. And accompanying that thirst is a focus on using those inputs to improve an output.
Another example is "A Heart for Change" by John Britt and Barbara Thomas, in which the authors make order of change management by organizing it according to the attributes of an effective cardiovascular system.
These examples are just brief illustrations of the importance of an organizing principle in conveying ideas and converting ideas into action. By that definition, I’m going to give Benjamin Franklin a break—he did, indeed, master the virtue of order.
Scott MacStravic, PhD
I still recall when the total costs of health care in the community were shared, more or less equally, among all those who lived in the community. It was called “community rating” and was the standard approach used by Blue Cross/Blue Shield plans in the 1960s. Different communities paid different premiums, reflecting how much health care they used each year, and how much it cost to “reimburse” providers for delivering that care. (It was truly “reimbursement back then, since Blue Cross, for example, paid hospitals 102% of their audited costs of operation, given the number of Blue Cross members they cared for.)
Community rating was on its way out even then, because other health insurance plans came up with an “experience rating” alternative, where individual employers paid premiums based on their own workforces’ use and costs of care. This meant that every employers whose experience was better than the community rating level would naturally choose the experience rating option, while those whose experience was worse would choose the community rating option. This kept driving up the community rating premium level, thanks to the “adverse selection” it promoted, until only experience rating could be sustained.
In both cases, the total costs of healthcare in an given place were shared, differentially according to employer experience, or equally based on community experience, based on what happened in one given year and was predicted to happen the next year. But in recent years, we have moved toward a different model, though never quite making it explicit. It is that model that is my suggestion for a modest proposal to reform healthcare.
Instead of sharing equally the past costs of healthcare, we could share unequally the future costs. At birth, and at initiation of such a system, each individual would be assigned a predicted lifetime health cost, not adjusted for lifetime inflation, since that would make it seem overpowering, but in today’s dollar terms. Patterns of how these costs would be shared over time by that individual, and by the family to which that individual would belong, as well as any employer who chooses to take on some responsibility for sharing those costs, would be created by actuaries, based on the “normal” timing of sickness episodes, pregnancy and childbirth, end-of-life costs, etc.
The predicted lifetime costs would then be “assigned” to each individual for which the prediction applies, and translated into the income/ability to pay lifetimes predicted for each. The costs of care would thus be shared over different years by individuals, instead of for the same year by populations. This fact would maximize the responsibility of individuals for managing their own health and sickness care “purchases”. It would give them the ultimate degree of “skin in the game” that has been recommended by champions of the “new consumerism”, “consumer-directed health plans”, etc.
What this should do, as a consequence, is maximize individuals’ and families’ interest in managing their risks. Every time an individual/family member adopts an “unhealthy” behavior, or a preventable risk condition or chronic disease, each would be assigned a higher lifetime health cost prediction and a higher immediate premium share, set of deductibles, co-pays and co-insurance, as decided by employers, insurers, and government agencies who share the burden. And every time an individual/family member adopts a healthier behavior, reverses a risk condition or chronic disease, each would be rewarded by a lower projected lifetime cost and next-year premium.
This would continue the present situation where insurers, employers and government agencies have strong financial reasons to promote health maintenance and improvement among all individuals for whom they are responsible, including the extra interests that employers have in doing so, since healthier employees reduce total labor costs, not just sickness care costs. But it would add an immediate and considerable motivation for individuals and families to adopt and maintain healthier behaviors and conditions, since they will be automatically rewarded or punished financially depending on both.
Clearly some mitigation of both rewards and punishments would be needed, or people could become financially ruined too easily. This mitigation could combine employers’ sharing in the premium costs, given their sharing in the productivity and other performance benefits of having a healthier workforce. Governments would surely be expected to mitigate the premium costs to poor and underprivileged members of the community for which they take responsibility, and from whom they derive tax revenue.
Governments, after all, and society as a whole benefit financially from improving the health of their communities. People who live longer in an employable and employed state earn more income, contributing more to the economy and paying more taxes. If they achieve the desired “telescoping” of the end of life, they will save governments by not taking as long or spending as much in futile efforts when they die. Plus governments will share in the direct savings from sickness care costs achieved when their beneficiaries become healthier and less in need of sickness care.
But it is the benefit to individuals that would be optimized in this individual-lifetime cost-sharing system. They would enjoy immediate financial benefits, perhaps augmented through employer incentives, when they adopt and maintain healthier behaviors and conditions. This would add to their “discretionary income” in precisely the same way as it does for individual users of tobacco products when they quit. The lifetime cost predictions would serve as an accompaniment to their retirement planning, indicating how large a burden their current level of risky behaviors and conditions impose on their future. The immediate penalty of higher premiums would serve as a stronger motivation for those who tend not to plan ahead.
The predictive modeling, information and communications systems needed for such a system would be substantial, and themselves add to “healthcare system” costs, but no more than current systems for sharing costs across communities already do. The technology is already available, with predictive modeling, for example, automated computer analysis, customization and online communications already well developed and inexpensive. It is a system that could easily be pilot tested in any population where payer and payee will agree. And it could be precisely the kind of “disruptive innovation” that could be the “tipping point” in healthcare system reform.
After 30 years of heading, teaching, consulting and writing about healthcare marketing, I am a firm believer in the power of labels. While I never thought that changing the name of a hospital to a “medical center” or “regional health center” would, by itself, guarantee the survival of the institution, it could end up meaning something to both the public and the institution, if it also came with a different strategy and pattern of actions.
The labeling issue is equally important in proactive health services, the generic label for any combination of health promotion, health risk behavior and health risk condition reform, and chronic disease management. When these are carried out to reduce the sickness care costs for insurance plans and employers, they typically carry the label of “population health management”.
This indicates the intent to deal with entire populations, such as employees or plan members. It emphasizes the intent to deal with those population’s health, rather than wait till they are sick. Even when it includes “disease management”, it aims to prevent crises, complications and worsening of targeted diseases, rather than treat such after they arise. And it intends to manage that health, to control, direct, and improve it to achieve the goals that management wishes to achieve.
Sometimes, the “P” in the “PHM” stands for “proactive,” or “preventive,” even “pre-emptive” to emphasize the fact that it differs from reactive health services focused on what could have been prevented. Increasingly, the “P” stands for “productivity”, as employers realize how much their workforce productivity can be improved, their labor costs reduced, and their profits increased through improving the health of their employee population.
In future, I expect the “P” to extend to “performance,” since the overall quality of workforce efforts, not just their costs, including technical as well as service quality, customer satisfaction, reputation, market share, etc. can be positively affected by health improvement, along with other management efforts such as internal pay-for-performance. The full benefits to HCOs and other employers of improved health on total performance is yet to be learned, but seems sure to be significant.
That takes the “P” about as far as it will go, at least with current technologies, and well past where current practice is focused. The “H” part will undoubtedly remain the same, since it is the health vs. sickness of populations that will remain the major differentiator of PHM from traditional sickness care, even though it is erroneously labeled “healthcare”. But that still leaves some questions about the “M”.
The term “management” is well-advised as a label when marketing the idea or any supplier’s particular approach to PHM to HCOs, insurers, and employers in general. It will resonate with the managers who are the targeted decision makers in such organizations, and promote confidence that the health of a population can really be controlled, in contrast to the uncontrolled costs of sickness care. But it may limit the methods employed to traditional management techniques, and thereby limit the success of PHM.
Managers are used to being able to direct and control employees’ behaviors within their organizations. Managers have authority to do so, can reward or punish employees based on their compliance with policies, procedures, and standards. But when dealing with their health behaviors, in contrast to their work behaviors, “management” may not have all the best techniques.
Health behaviors occur 24/7, not just while employees are at work. And PHM for employers often includes dependents at home, over whom management has little or no authority. Managers can use traditional incentives and rewards for good health behaviors, and even threats and punishments for bad behaviors, but only within limits, given laws and regulations, as well as people’s tolerance for others’ attempts to tell them what to do in private.
The marketing paradigm may have much to offer to managers and the suppliers they hire to carry out PHM initiatives. By treating employees and plan members like customers, to be “wooed and won” by pointing out the full array of benefits to their lives that PHM can deliver, managers may find greater impact than traditional management techniques and “payment” or “punishment” can achieve alone.
The Duke University Health System, for example, empowers all employees or dependents in its Prospective Health Program to choose their own prospective health goals, and co-design the action plan that will enable them to achieve such goals. It retains the right to choose what kinds and costs of support to give them in pursuing such goals, but gives the same basic support services to all. (www.dukeprospectivehealth.org)
It may be that the label used when seeking to market PHM programs to employees or plan members – both for managers when thinking about how best to do so, and when describing what they are marketing to prospective participants – should be different from either of the “Ms” in PHM. In order to promote making PHM attractive and satisfying to employees and plan members, a label such as “Personal Health Development” (PHD) may prove more effective.
It is at least doubtful whether people like to be “managed”, for example, or even “marketed” to, given consumers’ general annoyance with “marketers”. But when healthier behaviors are pursued as part of personal, or perhaps family health development, it is clear that the emphasis is on the individual or family involved, rather than just on management. And the more that employees or plan members see PHM or PHD/FHD as enabling them to pursue and achieve personal/family improvement, the more the idea should be attractive to them, not just managers.
It will always require a “balancing act” to ensure that managers as well as employees and families gain through PHM/PHD/FHD efforts, since managers will mainly be making the necessary cash investments. But the persons and family members involved will be making the major personal time, effort, self-discipline investments necessary, and often cash as well – e.g. in paying more for healthy foods, exercise equipment, etc. The more they see the effort as in their own interests, and satisfying their own emotional as well as rational needs and values, the more successful the efforts are likely to be.
It has long been recognized that one of the most powerful forces in human behavior is “conatus”, a combination of self-preservation and self-development described by the philosopher Spinoza four centuries ago. And the more that PHM can be thought of and marketed as PHD/FHD, the more likely it will become and be seen as something that employees, family and plan members can “buy into. [D. Wolfe “The Most Influential Force in Human Behavior” Ageless Marketing Nov 17, 2006 (http://agelessmarketing.typepad.com)]
Richard L. Clarke, DHA, FHFMAPresident and CEO, HFMAA few weeks ago, the Democratic Party regained control of the U.S. Congress for the first time in more than a decade. What does this mean for health policy in the near future?
The new Democratic leaders of the House and Senate have stated they will focus on several non-healthcare issues such as dealing with the war in Iraq, raising the Federal minimum wage, and changing immigration policy. These issues will require significant time and attention and may limit the Democrats’ ability to make much progress on other issues, including health policy. It is likely, however, that revisions to the Medicare drug benefit will be an important focus of the Democratic leadership. In addition, Democrats wish to deal more effectively with the growing number of uninsured Americans.
Whether progress is made on any of these fronts depends on the nature of the working relationship Democrats develop with the Bush administration and the Republicans in the Senate. Initially, both sides have signaled an interest in working together to develop solutions. And given the very slim margin that the Democrats have in the Senate, bipartisanship will be critical in that body. But we have seen the initial honeymoon between the two parties break down before--especially over contentious issues. So now what?
If progress is made dealing with the war in Iraq, and if both parties can come together on the Federal minimum wage and immigration policy, then national attention will shift to health policy. In fact, pre-election polls placed healthcare issues down the list of priorities behind concerns about terrorism and the war in Iraq, energy policy, and immigration. If progress is made on these issues, however, policymakers will face increased pressure from the public to address healthcare issues.
The most pressing healthcare issue is dealing with the uninsured. A recent survey by the Commonwealth Fund identified access to reliable, affordable health insurance as a top healthcare concern among Americans--not surprising given the almost 47 million Americans who lack health insurance. This situation destabilizes the health delivery system and results in inadequate access to care for the uninsured and distorted pricing and payment for healthcare providers. Relying on market forces and cost shifting is not the answer.
During the next two years, healthcare and business leaders, community activists, and politicians must work together to develop local and national solutions to this problem. These solutions may look like the approach developed in Massachusetts that engages all sectors of society to make coverage more affordable and available, or elements of the payment system used in Maryland that standardizes payment among all payers to reduce cost shifting. Certainly, none of these approaches is “the answer,” but accepting the status quo is no longer acceptable.
What is needed now is the courage in leadership to address the destabilizing effect of the uninsured. Now is the time for all of us to get involved.
Kirk Hamilton, FAIA, FACHAFellow of the Center for Health Systems & DesignAssociate Professor, Texas A&M University, College Station, TX
The feeling I got from the recent HealthCare Design '06 conference in Chicago was nicely framed by the comparison between Ian Morrison's opening high density yet humorous analysis of healthcare policy and statistics along with its possible futures and Robin Orr's simple and touching closing which effectively urged each of us to increase our self-awareness in order to design for true compassion. A great pair of windows to both the outside and inner worlds!
The constant focus and laser-like attention to evidence-based design in virtually every presentation tells me the concept has taken root and has reached a tipping point of compelling importance to practitioners and their clients. The merger of the Coalition for Health Environments Research and the Center for Health Design portends added strength and critical mass for advancing the common research agenda.
The evidence-based chorus at the conference was so overwhelming as to lead me to think we may be on the verge of overusing a great idea and turning it into a meaningless catch phrase. I think we need to see more and deeper development of the evidence-based model next year--going farther into process and measured outcomes, rather than repeating the same ideas--and we need to balance it with additional important themes for folks involved in healthcare design.
I attended one of the discussion groups (on timeless design) and thoroughly enjoyed a deeper discussion with a smaller group of interested participants. I enjoyed the comment of one new participant who told me she got as much or more from the interaction with other attendees as she had from the presentations and I also observed a high level of interaction in the corridors and the extensive exhibit hall.
I was especially delighted to hear spontaneous applause when it was announced that the HCD'07 in Dallas will be combined with the annual AIA Academy of Architecture for Health fall meeting, and I for one am eager to see and hear what comes next.
Following are some published thoughts about the effects on health care that might arise from this week’s election results.
Democrats may push for an agenda that includes curbing Medicare drug prices, strategists said. "The biggest impact by far would be the drug stocks,'' said Gregory Valliere, chief political strategist at Stanford Washington Research in Washington…. Merck, the fourth-biggest U.S. drugmaker, lost $1.43 to $44.47. Pfizer, the world's largest, retreated 65 cents to $26.64. Humana Inc., the second-biggest provider of Medicare drug benefits, dropped $4.21 to $54.44. --from “U.S. Stocks Fall After Elections; Health-Care Shares Lead Drop,” Bloomberg, Nov. 8. "Even if there's no change in legislation, just the greater scrutiny and oversight, that's going to constrain price increases," says Joe France, a managed care analyst with Banc of America Securities. --from "With Dems in control: Gridlock or change?" USA Today, Nov. 9. As numerous pre-election polls have made very clear, except in a few selected races, health care is playing a relatively minor role in determining the outcome of the 2006 midterm election. As a result, elected officials will arrive back in Washington with little pressure from voters to change the current direction of the country’s health care system…. Surveys show that the underlying level of public concern about health care issues today and in the early nineties is about the same. It is the presence of other issues winning voters’ attention and the absence of leadership by political figures on the health issue that explain why health care reform has little real political appeal today. --from “Health Care Reform: Time for a Wake-Up Call” by Drew Altman and Robert Blendon from the Health Affairs blog, Oct. 30. The House will certainly try to empower Medicare to negotiate Rx prices with drug makers. This might include establishing a Medicare-run Part D drug benefit, somewhat similar to Medicare A and B. --Alan Sager, Professor of health policy and management, Boston University School of Public Health, Boston, quoted in “Will the Dems’ House Victory Make a Difference in Health-Care Reform?” at ABC News, Nov. 8. "Although most voters named Iraq and congressional scandals as important, our polling showed that health care concerns and Social Security were the number two and three issues in importance for boomers and their parents," said John Rother, AARP policy director. "AARP hopes to work across the partisan divide to push the new Congress to address measures to make drugs and health care coverage more affordable, to give consumers better choices and helpful health care information, and to strengthen our retirement programs for the long run." --from “Election 2006: The Road Ahead,” in AARP’s Online Extra, November 8.
Democrats may push for an agenda that includes curbing Medicare drug prices, strategists said. "The biggest impact by far would be the drug stocks,'' said Gregory Valliere, chief political strategist at Stanford Washington Research in Washington…. Merck, the fourth-biggest U.S. drugmaker, lost $1.43 to $44.47. Pfizer, the world's largest, retreated 65 cents to $26.64. Humana Inc., the second-biggest provider of Medicare drug benefits, dropped $4.21 to $54.44.
--from “U.S. Stocks Fall After Elections; Health-Care Shares Lead Drop,” Bloomberg, Nov. 8.
"Even if there's no change in legislation, just the greater scrutiny and oversight, that's going to constrain price increases," says Joe France, a managed care analyst with Banc of America Securities.
--from "With Dems in control: Gridlock or change?" USA Today, Nov. 9.
As numerous pre-election polls have made very clear, except in a few selected races, health care is playing a relatively minor role in determining the outcome of the 2006 midterm election. As a result, elected officials will arrive back in Washington with little pressure from voters to change the current direction of the country’s health care system…. Surveys show that the underlying level of public concern about health care issues today and in the early nineties is about the same. It is the presence of other issues winning voters’ attention and the absence of leadership by political figures on the health issue that explain why health care reform has little real political appeal today.
--from “Health Care Reform: Time for a Wake-Up Call” by Drew Altman and Robert Blendon from the Health Affairs blog, Oct. 30.
The House will certainly try to empower Medicare to negotiate Rx prices with drug makers. This might include establishing a Medicare-run Part D drug benefit, somewhat similar to Medicare A and B.
--Alan Sager, Professor of health policy and management, Boston University School of Public Health, Boston, quoted in “Will the Dems’ House Victory Make a Difference in Health-Care Reform?” at ABC News, Nov. 8.
"Although most voters named Iraq and congressional scandals as important, our polling showed that health care concerns and Social Security were the number two and three issues in importance for boomers and their parents," said John Rother, AARP policy director. "AARP hopes to work across the partisan divide to push the new Congress to address measures to make drugs and health care coverage more affordable, to give consumers better choices and helpful health care information, and to strengthen our retirement programs for the long run."
--from “Election 2006: The Road Ahead,” in AARP’s Online Extra, November 8.
There is no doubt that hospitals in the US have a constant challenge trying to survive and prosper in an environment of payer parsimony. And it is clear that at least some have found advantage in keeping people out of their facilities, rather than enticing them in. Their actions are “benevolent” in the sense of not only doing good, but in acting in the people they serve’s best interests. But it is also “opportunistic” in that their actions select only those for this service who will benefit the hospital.
What these hospitals are doing is first identifying people whose uncontrolled chronic diseases and risk conditions -- particularly diabetes, hypertension, congestive heart failure and asthma – keep forcing them to come to ERs or be admitted. There are lots of such people in every hospital market, and keeping them out of the ER and inpatient units is certainly in their best interests. But by selecting those without health insurance for proactive chronic disease management, the hospitals serve their own best interests by keeping non-paying patients away from their doors.
If hospitals served the general public in such proactive efforts, including people who have good insurance, they would be carrying out their stated missions and adhering to their stated values in most cases. But they would also be going against their own best interests, since they would be keeping paying, as well as non-paying patients away. Instead, they select to serve only those whose reactive sickness care demand would not be profitable for them. [E. Echkolm “To Lower Costs, Hospitals Try Free Basic Care for Uninsured” New York Times Oct 25, 2006 (www.nytimes.com)]
By selectively serving the poor, these hospitals, mostly public or non-profit institutions, get double benefit. They carry out their “public service” or “community benefit” missions, and justify public support or tax exemption, along with keeping unprofitable patients out of their facilities. But they could also serve insured patients with the same problems, and make money by doing so.
Medicare and Medicaid are both engaged in demonstration projects testing the effects of a variety of approaches to proactively managing chronic diseases in order to keep their beneficiaries out of ERs and inpatient units. Both commercial insurers and employers are hiring vendors or operating their own programs to do the same. And they are paying to get that job done.
CMS, for example, is sharing up to 80% of cost savings achieved by large physician groups and integrated systems (once minimum savings of at least 2% compared to projected costs are achieved, and up to a limit of 5% of total projected costs). [“Physician Group Practice Demonstration Bonus Methodology Specifications” Centers for Medicare & Medicaid Services Dec 20, 2004 (www.cms.hhs.gov)]
And employers are even better prospects, since they can save in avoided disability and productivity costs, as well as sickness care expense reductions. Now that productivity improvements due to disease and risk management have been demonstrated, the employer market for such services may increase dramatically. [“HealthMedia Announces Productivity Improvements from Wellness and Disease Management Programming Using the Work Productivity and Activity Impairment (WPAI) Questionnaire” PRNewswire.com Sep 27, 2006]
While the proactive health management market -- whether aiming at reducing only sickness care expenditures, or productivity losses as well – is dominated by vendors, there is no reason why hospitals could not compete in this market, at least with local employers. This would enable them to combine truly benevolent efforts to improve chronic disease patients’ lives, as well as those of people at risk for both acute and chronic conditions, with serving their own interests by generating profitable revenue therefor.
The market for reactive sickness care is certainly not going to disappear, and will probably continue to grow. But as governments, insurers and employers strive desperately to reduce their sickness care costs, and consumers have enough trouble bearing their growing share of such costs, the proactive health management market is likely to be a lot more profitable in the long run, as well as in the best interests of all the people and organizations that hospitals serve.
Robert FrombergEditor-in-Chief, HFMA
One of the nice things about the Internet is the way it allows old friends to reconnect. The other day, I received an email message from a friend I knew 30 years ago. We had been roommates on the lower east side of Manhattan, where he still lives and works as a musician and comedian.
Getting his message reminded me of a story about him--a story that I believes applies especially well to health care.
I had recently arrived in New York from the Midwest, and my friend and I were eating at a down-at-the-heels coffee shop in our neighborhood. We had finished our meal, and my friend wanted dessert.
As the waiter approached, my friend said to me, "Watch this."
He turned to the waiter and said, enunciating very clearly, "I would like a glazed doughnut, please."
The waiter stared at him blankly. "Huh?"
My friend repeated the request, but this time in the most hurried mumble imaginable--"I wana gla do."
To which the waiter replied, "Oh, sure," and went to get the order.
I couldn't believe that the waiter could not understand the perfectly enunciated version and that he could understand the, to me, unintelligible mumble.
One lesson was that I wasn't in the Midwest anymore. The more important lesson was that effective communication requires communicating in a way that the recipient considers clear; whether the person delivering the information thinks it's clear is not so important.
HFMA's PATIENT FRIENDLY BILLING project encourages clear, correct, concise, patient-friendly financial communication. And although I wouldn't recommend that patient registration or billing office staff be trained in the art of the lower east side mumble, this story is an extreme example that you may be surprised how often your own choice of words and way of presenting those words--although entirely understandable to you--is not "friendly" to others.
Scott MacStravic, Ph.D.
Like all employers, healthcare organizations (HCOs) are probably considering, if they have not already made the decision to offer, a “consumer-directed health plan” (CDHP) model of sickness care insurance to their employees. A growing percentage of employers, as well as politicians and healthcare reform gurus see this model as promising a “solution” to the sickness care cost crisis.
Critics, however, argue that the high-deductible and health savings account features of CDHPs will make them unattractive, even scary to families concerned about their risks for or existing chronic conditions. If HCOs, and other employers for that matter, cannot attract such high-risk/high-cost employees to CDHPs, they are missing the opportunity to do something about the causes of roughly 70% of all sickness costs, and essentially “preaching to the choir”.
Moreover, chronic conditions and the most powerful risks that cause to them (e.g. smoking, high stress, physical indolence and unhealthy diets) tend to be the major promoters of employee absences and “presenteeism” (reduced productivity when at work). A recent study reported by the proactive health management (PHM) vendor HealthMedia, Inc. in Ann Arbor, Michigan reflects the added costs employees with high-risks and chronic diseases.
The average cost per affected employee for a series of risks and conditions, based on an analysis of 175,000 employees being “treated” by its PHM programs, amounted to:
[These figures are based on the report “Revolutionizing Behavior Change: Achieving and Measuring Productivity Improvements” HealthMedia.com Oct 11, 2006, though the calculations of costs per affected employee were made by the author.]
These costs were based on an average employee annual compensation of $50,000 per year. The average wages for hospital workers, according to Medicare, which uses average wages in calculating DRG payments, is more like $58,000, for example, so these lost productivity costs probably understate the costs to HCOs. Actual costs to particular HCOs will depend on the prevalence rates of these and other disease and risk conditions in their workforces, of course, as well as on their particular compensation levels. These productivity losses were in addition to the sickness care, workers compensation and disability costs generated by such high-risk employees. Of course, a CDHP strategy could ignore such employees and force them into CDHPs as the only option offered by the HCO. Or it could continue to offer traditional sickness care insurance, and force such employees to live with far higher premiums if most of the healthy employees opt for the CDHP option. Employers might simply hope that by making sickness care coverage worse, or more expensive, they will drive high-risk employees and dependents away to other employers.
Of course, with severe shortages in many professional categories a common problem for most HCOs, such a strategy might not be feasible, and is certainly morally questionable. But CDHPs can be made far more attractive to higher-risk employees/families, and by the same token far more likely to reduce both their sickness care costs and productivity losses. A few, relatively simple steps should suffice, according to Michael Parkinson, MD, chief health and medical officer of the Lumenos CDHP insurance plan.
Dr. Parkinson suggested that CDHPs should:
[“How to Design Consumer-Directed Plans for High-Cost Members,” Managed Care Week Oct 16, 2006 (www.aishealth.com)]
In addition to ensuring that the CDHP provides these features, a plan that includes full coverage plus meaningful incentives for completing or “graduating from” (not merely enrolling in) proactive self-management courses addressing risks and existing chronic diseases can increase high-risk/cost employees’ confidence that they will be no worse off, since their conditions should be less risky. And in addition to improving employees’ control of their sickness care costs, these features would enable them to improve their productivity, and reduce HCOs’ labor costs and shortages.
Moreover, the CDHP coverage plan, together with HCO incentives and promotion of “worksite wellness” programs that promote employee health, can reduce both sickness care costs and productivity losses when aimed at employees not yet at high risk. Such PHM interventions can reduce the incidence and prevalence of the risks, or at least of the higher levels of risk that tend to promote both avoidable sickness care costs and lost productivity.
When HCOs consider CDHP options, they should also consider how these options affect both significant performance factors.
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