Guest Commentary: Getting to the real drivers of cost

Guest post by Keith Lemer

Keith Lemer WellNet HealthcareMuch of the healthcare system is broken due to insurance companies hiding utilization data from their clients and not providing them with the ability to manage and measure this information.

Over the past 30 years outsiders have vested conflicts of interest which are not in line with their clients' own best interests. They are not interested in finding solutions to lower medical benefit costs if it means reducing their own income.

Medical benefits aren't that complicated. But outsiders want it to appear that way. They make benefits seem difficult so employers won't stand up and question annual double-digit cost increases, since employers can't question what they don't understand.

It appears from all of the studies that their remedies for high costs are purely reactive:

1. Beat-up the vendors to get the best price;
2. Find another carrier, TPA or vendor that will appear to offer better services; or
3. Offer suggestions to change plan design as their main lever, a primitive tool for cost control.

However, when significant changes are made to the healthcare plan, they often result in disruption and frustration for senior executives, human resources professionals and employees.

These choices do not confront the real issue: Without data, employers can't manage or measure their employees' healthcare benefits.

Those employers that pursue a self-insurance healthcare management strategy do have a somewhat easier path to accessing plan data. However, because of the highly fragmented and complicated nature of both claims management and clinical data, it has been difficult to capture, aggregate and analyze in a meaningful manner.

In short, there is a severe absence of information transparency. Every company needs to be informed about where they are spending their money. Currently, few employers truly understand what is going on inside their corporate health plan. Executives know more about how many pencils and pads of paper they have in their organizations than they do about how employees are using healthcare resources.

Coming off a major recession and thrust into the teeth of a national debate on health reform, employers are taking a critical look at their health benefits strategy and the value they derive from it. Interest in personal technology tools is surging. Nearly half of all employers say it is important for insurers to offer them; however, less than half of these same companies are satisfied with what's made available.

There is a growing body of anecdotal evidence suggesting employers can achieve savings and better results for their companies and their employees by implementing proactive, hands-on business management strategies to employee healthcare benefits plans. They include examining:

  • How customers are served--by applying customer relationship management applications to determine what each client buys and how long it takes to address a customer complaint;
  • The performance of suppliers in meeting contractual and operational obligations--by using supply chain management technologies to monitor pricing trends, delivery histories and current shipment status.
  • The disposition of enterprise resources--by using enterprise resource planning systems to ensure the right assets are at the right place at the right time within the organizations to meet mission critical objectives.

C-level executives must change their mindset on healthcare and be ready to focus on a new corporate discipline, Healthcare Performance Management (HPM.) HPM is a technology-enabled business strategy that tackles the challenge of controlling healthcare cost and quality in the same way corporations have optimized customer relations, supply chain management and enterprise resource management by delivering better and more cost-effective healthcare benefits for employers who cover their employees.

HPM, by contrast, must be driven by the most senior levels of an organization and requires constant engagement. After nearly four decades of not having price transparency on healthcare benefits, it seems the business community is ready for such engagement.

It is therefore imperative that the business community stop talking about the pain and use the data they can obtain to begin dealing with the problem.

Editor's note: Keith Lemer is president of the WellNet Healthcare Group, a Maryland-based medical management company providing integrated technology and healthcare services. Mr. Lemer is also on the board of the Healthcare Performance Management Institute.