Archive for Industry Sector
by Scott MacStravic
May 7, 2008 at 8:46 pm · Filed under Hospital and Health System CEOs, Business of Health
In a previous article on the move toward increasing the places where health care is delivered, I noted a wide variety of additional locations where health care organizations (HCOs) are making care available. But the trend is even greater than I indicated. As reported in another earlier article by George van Antwerp, at least one new organization is offering health care at anyplace a person desiring it happens to be at the time.
American Well functions as a “broker” of physician services, once consumers have signed up as clients with their health history and payment information, and physicians have signed up to offer care in the form of online consultations. It offers consumers information on the qualifications of physicians relevant to the problems they describe, along with ratings of patient satisfaction among consumers who have consulted with them previously through this online service.
This means that consumers can obtain consultations at their home or workplace, or thanks to wireless communications devices, anywhere they and their devices happen to be. Phone communications can be arranged to accompany the online interactions, adding live audio communications to real time online transactions. American Well advertises itself as creating the same “transaction” opportunities as online shopping services such as Amazon.com and Expedia.com in the retail and travel realms.
It also notes that the care consumers get in this manner can be integrated into other sources that consumers use, including their personal physician, where they have one. Extensive records of the online transaction patients have had with American Well can be communicated to such physicians, with the patient’s permission, of course, as soon as the consultation is completed.
This service also includes information on the prices that will be charged by physicians offering the service, and enables such physicians to link their fees to the level of quality and past patient satisfaction they can demonstrate. Physicians can log on to the service when they wish to be available for consultations, and log off when they do not, meaning they control the amount as well as timing of their availability, based on their personal preferences.
Dr. Robert Shoenberg, co-founder of American Well has noted that current health care web sites offer consumers information, but not any opportunity to turn what they learn into transactions, i.e. actually obtaining care. By signing up both consumers and physicians, and enabling consumers to identify who is available to serve them online at a time and place they wish a consultation, American Well enables them to carry out a transaction in essentially the same way they buy from online retail or travel sites.
Consumers who log on to the American well site are walked through a process of indicating their problem or concern, identifying who is available to serve them, getting advise on how they can get the most benefit from their discussion, select a physician meeting their recorded preferences regarding age, gender, languages spoken, etc. They can access “five-star” ratings of each physician available based on previous consumer ratings of each, and determine the price of the transaction set by each physician.
Physicians can determine what topic(s) the consumer wishes to discuss, and offer the option of seeking care from a different specialist. Patients can see the responding physician online, and augment the online consultation with phone contact through the same computer, while enabling the physician to access an online medical record previously created. Each transaction is followed immediately by a feedback survey of the patient, and clicking a button to send the record of the transaction to the patient’s personal physician, including any needs concerns not addressed during the transaction that the personal physician can take care of at the next face visit.
Insurers can exert some control over use of the service by varying co-payment requirements according to the volume of use for individual plan members. In practice, the ready availability of physician online consultations wherever and whenever members wish them should reduce the unnecessary use of emergency rooms and face visits of other kinds. As such, the online service adds to retail clinics as alternative sources of care that can be coordinated with patients’ regular source of care. Nurses at retail clinics could use the online service as an immediate source of consultation when patients present with a problem where physician input is desirable.
This same service can easily become part of a more consumer-driven approach to health management, where consumers lack resources and programs offered by their employer, insurer, or physician. Ideally, insurance plans will come to appreciate the advantages of online health management consultations, in addition to sickness care transactions, and include coverage for them where they prove to be cost effective. [L. Dunbrach & R. Shoenberg “Health 2.0 – The Transformation to Online Care,” HealthIndustryInsights.com Webinar]
In any case, this is one example of a method for consumers obtaining care and physicians delivering it that falls into what is normally espoused as the “new consumerism”. Consumers have far more control over when and where they get care, while able to select physicians with considerable transparency as to qualifications and performance, as well as price. Dr. Shoenberg considers it to be a truly disruptive innovation. The rest of us will have to wait and see.
by Scott MacStravic
May 5, 2008 at 2:33 pm · Filed under Employer CEOs, Population health management, Variability in PHM Series
The first purpose of the assessment process is to determine the size of the PHM challenge and of potential gains from implementing a PHM strategy. The assessment process is then also used in the evaluation process, to identify changes in measured “success” dimensions against the baseline data. But another key use of the data is to identify and select which members of the population make the most promising targets for participation in which PHM intervention, together with how many available interventions will likely justify their investment.
This step begins with identifying the baseline costs, both direct and indirect when applied to employee populations, linked to individuals and the health-related factors each has been found to have. Usually, without extensive multivariate analysis and predictive modeling, the “potential” is estimated based solely on the baseline costs. But the real predictor of potential economic gains lies in the particular PHM interventions that will be applied on a DIY or outsourced basis. And this information is peculiar to each PHM strategy, intervention, and supplier, rather than any generalizable average for PHM as a whole.
Moreover, when measurement problems such as side-by-side comparison “self-selection bias” and before/after “regression to the mean” effects have been overcome, there remains the inherent difficulty of predicting realistic potential cost impacts or other benefits based on past data. While past data may accurately describe the past of the very population to be addressed by PHM, it does not translate easily into predictions of the future. And while a given PHM supplier’s own past performance may be “statistically valid and reliable”, it may not be a sound basis for accurate prediction of results in a new population.
Within these limits, PHM investors and suppliers will want to determine which and how many population members represent the best risk/reward potential for which particular PHM interventions. Some suppliers and employers have employed a completely customized approach to PHM, where each individual either chooses each’s own goals or is assigned a coach who will customize the intervention to the individual’s mix of challenges, and address as many of each’s individual problems as possible. Experience suggests that individuals can handle more than one, but rarely more than two or three, so the number of problems to be addressed is normally small.
In many cases, there is one specific problem that is the basis for the PHM intervention to which members of the population will be invited. This does not mean that the intervention will have a very narrow focus, however, though it may. A smoking cessation program normally focuses exclusively on enabling participants to quit, but may have to address a wide range of perceived barriers and related issues, including stress and weight management along with the smoking behavior, per se. And diabetes disease management interventions routinely include attention to blood pressure and cholesterol levels, in addition to blood glucose.
While the baseline costs linked to individuals may guide targeting to some extent, the psychographic data indicating the probability that each will make a needed change and achieve success thereby, together with PHM suppliers’ demonstrated performance will add significantly to how “informed” the choice of targets can become. In many cases, the supplier may guarantee results for particular population segments, interventions, or success dimensions, making the targeting that much better informed.
Targeting necessarily includes consideration of how PHM suppliers charge, and what additional costs may be incurred by targeting more and particular segments or individuals for interventions. When the supplier charges on a “per population” of flat fee basis, it will not add fee costs to include as many members of the population in any given intervention, though most charge a fee for each separate intervention, which will multiply costs by the number of interventions selected, rather than the number of members participating.
When the supplier charges per participant, perhaps with graduated fees based on the risk/reward potential it determines for each and the different intensity/expense for the graduated interventions, it is the number of members targeted for each intervention that will represent the upper limit on fees. Moreover, payers will likely incur additional costs, per member, per participant, or even per successful participant (e.g. when incentives are offered for success rather than participation alone), which have to be considered as well. And while payers may recommend steps their clients should take that incur costs, the client will have the last word on which kinds of support it provides and what it will pay for what.
There will always be the unknown costs of participation or success incentives that will have to be paid, but this will typically be substantially less than the economic gains associated therewith. The past performance of the supplier applied to the baseline costs and economic value of members of the actual population to be addressed should help in ensuring that the client’s total costs are kept lower than the client’s benefits. Controlling the number of members targeted and number of interventions invested in based on risk/reward vs. predicted or controllable costs, is the best overall approach to take.
by Scott MacStravic
May 5, 2008 at 11:28 am · Filed under Employer CEOs, Employee Health Management
When I began my efforts in employee health management (EHM) fifteen years ago, the hospital system where I was responsible for strategy and marketing began the strategy with onsite health fairs for large employers. These gave us as well as the employers involved their first overall indications of the state of their employees’ health, other than that delivered by their health insurance premium increases and claims reports.
Because a fairly significant effort and expense was required in organizing each health fair, with volunteers and paid staff from our system, plus internal promotion efforts by the employer, the fairs were limited to large employers at first, those with thousands of employees in most cases. But there was also significant interest among smaller employers, with only hundreds or even dozens of employees.
We found it possible to organize reasonably efficient screening and educational efforts for smaller employers by inviting a number of them to participate at the same time and place. By conducting the efforts at large office buildings or campuses, for example, we could serve many employers at once, creating sufficient numbers to make it reasonable, and relying on the identification of the different employers for each employee who participated for analytical purposes.
A recent example of employer cooperation in ongoing coaching and monitoring of EHM participants has emerged in Milwaukee, Wisconsin. The QuadMed onsite clinics, which emerged as a separate business for the Quad/Graphics printing company when its own clinics proved successful are being shared by a number of employer clients in the area. These clinics are owned by the employers, while they are operated by QuadMed at the employer sites.
Quad/Graphics, itself, plus clients Briggs & Stratton Corp. and Miller Brewing Co. are “sharing” their onsite clinics with each other’s employees. This includes both the kinds of primary care services that employees and their dependents may need, and any EHM services offered at the clinics as well. By multiplying the locations available, the arrangement makes it easier for dependents, especially, as well as workers on their days off, to access a site nearest to their homes.
With the high price of gasoline, this also reduces the travel costs and time for employees and dependents, and makes it more likely that they will use early detection services such as mammography, for example. Modest co-payments of $5-6 per visit make these sites highly competitive with either retail clinics or physician’s offices in the area. And the more the onsite clinics are used, the more information is included in QuadMed’s data base about each employee or dependent involved. [E. Sanders “Companies Agree to Share Workplace Health Clinics” Business Journal Serving Greater Milwaukee, Apr 25, 2008]
It would not take much to permit smaller employers to cooperate in an onsite medical clinic located in a large office building or campus in the same way that health fairs are made accessible to them. Employer identification for each patient served would enable the billing of services to the proper employer, while offering convenience of location and minimal lost time from work seeking care in return, for employer and employees.
By aggregating a number of employee populations as potential participants in both normal primary care and EHM services at such a convenient location, employees could conveniently get coaching and risk condition or disease state monitoring services. This convenience is already offered by at least one EHM provider, Sutter Health Partners in Sacramento, California, for example, using visiting coaches and biometric screening. Making it permanently available at onsite medical clinics would be that much more convenient.
Such clinics have already been shown to save on the costs of medical care, per se, compared to emergency rooms or urgent care centers, as well as private primary physicians, to say nothing of the time, travel, and out-of-pocket costs saved by employees who use them. Cooperatively supported clinics could be developed by a group of employers working in concert, or by onsite clinic development and operating firms, such as QuadMed, Whole Health Management, Ceridian Health or CHD Meridian.
In general, results from onsite clinics have proven to be significant and positive, since the nearby convenience both promotes employee participation in EHM and saves time away from work for obtaining routine medical care. The clinics often result in earlier identification and intervention for acute and chronic diseases, as well, because of their convenience for workers. Sharing the costs of operation and calculating the direct and indirect savings achieved will be more complicated with cooperatively owned clinics, but there should be enough economic benefit for all.
A special advantage to onsite clinics can be in verification of workers’ qualifying for EHM incentives. The clinics can test employees to be sure they meet goals relative to health behaviors (e.g. testing for nicotine or drug use) and conditions (weight, blood pressure, sugar, cholesterol, etc.) They should also be helpful in biometric screening and ongoing progress tracking in support of employees’ (and dependents’ or retirees’ where applicable) participation and success.
by Scott MacStravic
April 30, 2008 at 1:14 am · Filed under Employer CEOs, Employee Health Management
Perhaps the biggest impact of looking at employee health management (EHM) rather than general population health management (PHM) is the difference it makes in what make the best investments. When the sole concern is reducing sickness care costs in an insured population, it makes pretty obvious sense to look at sickness risk factors and chronic diseases. But when the concern expands to include reducing all factors that impair or impede productivity and performance among employees, the scope of investments can expand dramatically.
For example, while chronic conditions such as diabetes, asthma, coronary heart disease, congestive heart failure, and chronic obstructive pulmonary disease may be the biggest causes of preventable sickness care costs in a population, they are likely not to be the best investments for employers. Other factors, such as depressed feelings, stress, smoking and alcohol addictions may be far greater impairment factors because of their higher frequency than chronic diseases in employees.
While it is possible to separate the impact of diseases on sickness care costs, merely by analyzing the diagnostic codes involved, it is anything but easy to identify the impact of individual impairment factors. When such factors are identified, they almost never occur alone, but are part of a set of factors that vary widely across individuals in their mix and severity of impact. Depression is a common co-morbidity for diabetes and heart disease, but stress is a common “co-impairment factor” for a wide range of others, including overweight/obesity, poor sleep, nutrition and fitness levels, as well as depressed and anxious feelings.
When productivity/performance impairment is found through objective measurement, or self-reported by employees, it usually comes in people who have multiple factors at the same time. Their overall impairment normally gets counted as linked to every factor reported, and counted multiple times. This multiple counting can be overcome by either dividing the total amount of impairment by the total of all prevalence figures for all the factors, or by separating out the individual factors in some way.
Dow Chemical Company, for example, asked each employee to identify which was the primary impairment factor affecting each, so as to count the effect of each factor only once. But this under-counts the overall impact of each factor, by not recognizing the potential that some add to the effects of others, even if not primary, while over-counting the effects of some which are most often labeled primary, but whose impact is exaggerated by what may be many secondary accompanying factors.
If the true effect of individual factors can be identified, along with the true effects of EHM programs targeting each such factor, employers would have a far better chance of selecting the most promising target factors and individuals for EHM investments. Moreover, EHM vendors could use the identification of the factor that has the greatest impact on individuals’ impairment in recruiting employees for participation in the program that will affect it the most.
As long as individual employees see themselves as benefiting predictably and significantly if they improve their productivity/performance, they should be as motivated to devote their efforts to the program that will achieve such an improvement. Particularly for employees who are paid, either wholly or in part, on the basis of their productivity/performance, it would make explicit economic sense for them to enroll in the EHM program that will simultaneously do them and their employer the most good.
Employers must always be kept from knowing which employees are impaired by which factors to what degree. They always have access to whatever productivity/performance data is already available through their ongoing employee reviews or data, but are prohibited from identifying confidential health information about their employees that may be responsible for lower than desired performance. But as long as employees give permission to EHM vendors, with the understanding that identifying the most powerful impairment factors affecting each and the most promising EHM programs for each, the employees stand to benefit as much as the employer.
Employers can use what they learn about the effects of particular factor-specific EHM interventions and the effects they have on overall employee productivity/performance to graduate the incentives they offer to employees that achieve specific health goals, such as quitting smoking, or reducing their blood pressure, sugar, and cholesterol, for example, or improving their nutrition, fitness and sleeping habits, controlling their stress or managing their chronic disease. As long as employees’ achievements can be verified, employers should be confident that they, too, are benefiting.
Difficulties will arise with respect to self-reported impairment and recovery, whenever there are incentives to be gained. It would be a simple matter for employees to report that they are sleeping better, exercising more, have their stress under control, eating better, have reduced their alcohol intake to no more than some set limit per day. But employers may prefer verification to paying off for good reports, alone.
Some verification is relatively simple: weight loss can be checked by a scale, smoking cessation by testing for nicotine, fitness by a test, etc. But many are not easily verified, while productivity/performance improvement, per se, should be verifiable at least to some degree. And as long as employees figure out a way to produce more and perform better, they should be eligible for rewards. The EHM provider need only make sure that enough employees improve enough through participation in the best interventions to make such improvement possible.
If employees learn that improving their stress management can increase their productivity by 10%, for illustration, and employers learn that stress is a major impairment factor for the entire workforce, employers can work on reducing stress levels they impose on workers, while helping workers cope with stress. This may involve a combination of an EHM provider’s stress management program, employer-sponsored training in time management, and improved scheduling of efforts so that demands and deadlines are reasonable rather than oppressive.
It is clear that predictive modeling is approaching the point where the most promising individual impairment factors will soon be able to be identified as directly and simply as can the most expensive sickness. Once this is achieved, the potential for enabling both employers and employees to make the best possible decisions about where to focus their investments of money and effort will be greatly improved, and thereby, the success of EHM investments in general.
by Scott MacStravic
April 26, 2008 at 11:18 am · Filed under Employer CEOs, Employee Health Management
The “Customer Advocacy Score” is becoming common as part of marketing and business intelligence for a wide range of firms. It is particularly useful for firms which rely on a large portion of repeat, even continuing customers, in industries where customers are ‘highly involved” in their supplier relationships because of the importance of the products or services provided. Banks and other financial service firms, and healthcare providers fall easily into this category.
In population or employee health management (PHM or EHM), insurer and employer clients are sure to be highly involved in their supplier relationships, because of both the amount of economic impact available through these strategies, and the amount of trust that and cooperation that is essential between them and their supplier. Clients share all kinds of sensitive information with such suppliers, to say nothing of the even more personally sensitive information shared by their employees, where health-plan member or employee trust is essential to gaining adequate participation in PHM or EHM.
A 2007 survey by Forrester Research, Inc. involving more than 10,000 Europeans in seven countries found that only 27% of respondents rated their own banks high in terms of “customer advocacy”, the same percentage as in 2006. Customers that rate banks’ customer advocacy high are far more likely to turn to that bank for other products and services, while banks with high scores outgrow their lower-scoring rivals significantly, without having to rely on mergers and acquisitions. [J. Compton “Advocacy Strengthens European Banking Relationships” 1to1 Weekly, Dec 17, 2007]
The score is based on where customers place their bank on a continuum from “Does what is best for its bottom line, regardless of its impact on customers” to “Does what is best for customers, regardless of its effect on its bottom line”. Firms whose customers’ score them toward the latter pole are considered to have far better scores than those whose customers score them toward the former. [B. Doyle “Customer Advocacy 2006: How Consumers Rate Their Banks, Brokerages, and Insurers” Forrester Research Business View Trends, May 22, 2006]
For healthcare organizations (HCOs)considering entry into the PHM/EHM market, learning how prospective clients, i.e. insurance plans or employers, rate them on customer advocacy, particularly in comparison to other suppliers already active in the market, may help in deciding whether to make the entry, and which prospects to try first. Learning how consumers rate the organization may also prove helpful, since if they don’t rate the HCO well on this dimension, it is unlikely it will be able to enroll many targeted plan members or employees in an intervention program, even if the client is won over. And without high participation, success is both less likely and sure to be less delightful for clients.
Since HCOs have been sources of double-digit inflation in sickcare costs for a long time, both employers’ and insurers’ views of them may be somewhat jaundiced. Employers may be a far better prospect, in any case, since they can gain far more in economic benefits – through improved productivity and performance, turnover reductions, and even increased customer satisfaction and loyalty – while insurers are focused on reducing healthcare expenditures. Moreover, since reducing insurers’ expenditures tends to cost dollar for dollar in HCOs’ revenue, this class of payer is nowhere near as attractive. By contrast, employers gain more by reducing productivity and performance impairment than by cutting healthcare costs, so need not affect HCO’s sickcare revenue nearly as much.
Where HCOs are successful in gaining employer clients, checking their perceptions of the HCO’s commitment to their interests vs. the HCO’s own should be a good predictor for retention vs. defection of these clients. Learning why consumers as well as clients rate the HCO high or low will also help in either maintaining good ratings or improving poor ratings, and thereby gaining an improvement in future attraction of new or retention of current customers. Learning why they rate rival suppliers good or bad on the scale will also provide useful “competitive intelligence” about the market.
In any case, learning how the HCO is rated by prospective clients as well as consumers, will greatly assist in making decisions about the PHM/EHM market. Learning how its own employees rate it on “employee advocacy” can also help in deciding whether to invest in internal EHM, or even in an outsourced program, since trust in the HCO as an employer will be key in achieving high participation in either case. Helping employer clients to check their scores on this same dimension will also help in their decisions, and perhaps justify the high level of employer support required when HCOs are suppliers and the employers the clients.
by Scott MacStravic
April 23, 2008 at 3:59 pm · Filed under Employer CEOs, Employee Health Management, Health Management
There are four simple ways to deal with any differences between voluntary and default participants, though the effectiveness of each will vary in each EHM situation:
- Minimize per participant costs
- Find out what the different success rates are for voluntary vs. default participants
- Offer success incentives
- Offer choices vs. predetermined EHM programs
1. If default participants deliver lower gains per participant, then EHM providers and clients should make sure that the costs per participant are still less than such gains. One approach is to use charges and costs that apply per population, rather than per participant. When fees are set and costs incurred on this basis, and there are no added costs based on how many participate, increasing participation rates will always end up doing at least as well and usually doing better by using the default option. As long as even one more participant than would have enrolled voluntarily succeeds, results will be better.
On the other hand, if EHM providers charge per participant, then the default option may result in too many participants and too high costs for the average gain per participant to overcome. The provider’s or employer client’s past experience should reflect what the average gains per participant have been under the most common scenarios:
* Voluntary enrollment
* Voluntary enrollment with incentives
* Default enrollment
If default enrollment strategies in the past have reduced the average gain per participant to levels that yielded lower ROI ratios and amounts than the two voluntary alternatives, then either costs/charges per participant should be lowered, or the option should not be chosen.
2. Assuming that EHM providers have worked with both voluntary and involuntary participants before, each should be able to describe what the different success rates for each have been, so that the expected benefits vs. costs for both cohorts can be at least estimated. Providers may be willing to guarantee some minimum ROI, for example, putting the onus on them to make sure that the EHM program works well enough among all participants to achieve desired results.
If past experience has indicated that success rates per participant have been higher for voluntary participants, but the success gains for default participants have been high enough to justify their inclusion, given costs per participant, then the default option may make sense. Basing the decision on the EHM provider’s experience, rather than the client’s means there is the risk that the client’s situation and population at risk may be different, so extrapolation from such experience may be inaccurate. A pilot test of the client’s population may be used to check this possibility, or the provider may be willing to guarantee acceptable results with the default option.
3. The use of adequate success incentives rather than participation incentives should encourage significant effort among default participants. Whenever enrollment in the EHM program is by automatic, default with opt-out choice, paying incentives for participation doesn’t make much sense anyway, while incentives for achieving whatever is defined as success can motivate both voluntary and default participants. Such incentives will add to the costs of each success, however, so their amounts will have to be sufficiently less than the average gain per success to ensure positive ROI ratios and adequate ROI amounts.
The gamble involved in success incentives is that they will have to be paid to those who would have succeeded anyway, as well as those who would not. So EHM providers and their clients should compare scenarios involving only voluntary participants and no success incentives compared to default participation with success incentives to see which delivers the best mix of ROI ratios and amounts. Another option is to base the success incentive on improved productivity and performance, rather than health behavior/status improvements, so that the employer will see that the direct economic gain from success justifies the incentive.
4. Even though enrollment in the overall EHM program may be automatic by default, and the usual choice for employees is to participate or not, the provider and employer client may offer those automatically enrolled a choice as to which of multiple EHM interventions for which each is eligible each prefers. This may mitigate negative effects of “forced” enrollment. Moreover, when employees voluntarily choose a particular EHM intervention, they tend to be more committed to their choice than when they have none. This may improve the success rate among participants, with or without incentives that add to costs per success.
When EHM programs are focused on productivity/performance impairment factors, rather than just diseases to be managed or risks to be reduced, chances are that virtually every employee in the workforce will be eligible for more than one among the combined diseases, risks and impairment factor programs offered. One EHM provider’s database of over 200,000 employees, for example, reflects that only 2.45% of employees had 0-1 impairment factors, while 43.02% had at least one risk or disease condition. [“Productivity Dashboard” HealthMedia.com Jan 23, 2007] Chances are the vast majority of employees can be offered a choice among at least two different EHM interventions, making at least that aspect of EHM participation “voluntary”.
By employing one or a mix of these strategies, any negative effects of default participation in EHM programs should at least be mitigated, if not eliminated entirely. Only one of the four adds to costs, unless the employer has to sign up for more EHM initiatives in order to offer enough employees a choice between at least two when choosing that strategy. And a combination of more than one strategy should improve the overall success rates and ROI outcomes for both provider and client.
by Scott MacStravic
April 23, 2008 at 3:57 pm · Filed under Employer CEOs, Employee Health Management, Health Management
The default option is the technical term for arrangements in which people do not have to actively choose to participate in some program – they are automatically enrolled therein, with the option to decline. This saves the costs of efforts to obtain their participation, and usually results in far higher rates of participation than do arrangements where people have to enroll themselves. It has a number of applications in healthcare, as well as with employees, such as automatic enrollment in retirement plans. [S. Halpern, et al. “Harnessing the Power of Default Options to Improve Health Care” New England Journal of Medicine 357:13, Sep 27, 2007 1340-1344]
This same concept has also been adopted by some EHM providers. It has been highly effective in increasing enrollment in EHM programs, compared to those where individuals must actively opt in. Providers using this approach have reported participation rates in excess of 95%, where rates in most such programs rarely reach even 30% without incentives being offered and paid for enrollment. But incentives add significantly to costs, and make the achievement of desired ROI ratios much more difficult, though they may help with ROI amounts.
As described earlier - Promoting Success vs. Participation in EHM - incentive costs applied to all participants are automatically multiplied by what can be many times, depending on the success rate among such participants, which can vary from 0% to 100% in theory, and often vary by at least half that amount in fact. A $100 incentive paid to all participants becomes an added cost of $500 per successful participant in a smoking cessation where only 20% quit. And since the desired economic gains in a smoking cessation program arise from quitting, it makes it that much more difficult to achieve a positive and satisfying ROI ratio when the ROI denominator increases by $500 per success.
Participation vs. Success
In the evaluation of EHM programs, there has always been the potential for self-selection bias when the healthcare, disability and workers compensation costs, absenteeism and presenteeism rates, and other measures of success among participants are contrasted to non-participants as the basis for gauging the gain made by such programs. This bias reflects the self-evident possibility, even likelihood, that individuals who voluntarily choose to participate in such programs may be more motivated to make the behavior/lifestyle changes needed for success than are non-participants.
This bias can be identified and used to adjust simple side-by-side comparisons between participants and non-participants by measuring the costs of both in both baseline and participation periods. If non-participants’ costs were higher to begin with, and declined even though they did not participate, then only the decline in costs among participants between their baseline and participation periods that is greater than the decline among non-participants should be counted as probable effects of their participation. But if individuals are automatically enrolled, there may be too few people in the non-participant group for statistically significant differences to be found.
It is not the statistical significance that will concern most employers who invest in EHM, however, but the economic significance. If 95% of all employees targeted for participation enroll, and as a result, the total number who succeed in reducing their costs, improving their productivity and performance, etc. the employer is likely to be well pleased, regardless of whether or not statisticians are. It is the potential for the success rate being lower in the “default option’ case that should worry them.
If people who voluntarily enroll in a given EHM program are likely to be more motivated and ready to change, and as a result yield a higher success rate, then it follows that people who are automatically “default” enrolled, with the possibility of opting out, will not be as highly motivated as those who make the effort to actively enroll themselves. In such cases, the success rates of default participants would probably be lower than among those who would have voluntarily enrolled.
For example, those who actively/voluntarily enrolled may involve only 20% of those eligible, but deliver value based on a success rate of 50% among them, while the total of those enrolled by default involve 95% of those eligible but achieve a success rate of only 20%. This overall rate comes from the 50% success rate among those who would have actively enrolled if given the opportunity, plus a lower success rate among those enrolled by default. The success rate for those “involuntarily enrolled” can be determined, given these figures.
If the voluntary 20% of participants achieved a success rate of 50%, and the overall success rate for all participants was 20%, then of the total, 50% x 20% = 10% or half the successes came from those who would have voluntarily enrolled. With an overall success rate of 20%, this means that only 10% or half the successes came from the 75% of participants who would not have voluntarily enrolled, but were enrolled by default. This means that the success rate for those 75% was only 10% divided by 75% = 13.33%.
On the other hand, it may also be the case that those who are most likely to voluntarily enroll are already healthier than the average member of the population, precisely because they are more motivated and concerned about their health. In such a case, the success rate among default participants may be lower, while the success gain, the economic benefit to the employer, may be higher. Since it is the gain due to success, not just the sheer proportion of participants who succeed, that determines the overall economic impact for employers, a higher success gain, even with a lower success rate, may prove to be better than a higher rate and lower value.
In the example used above, if the 20% voluntary participants have a 50% success rate with a $400 average success gain for each, they contribute 50% x $400 = $200 per participant to the total gain. If the 75% “default” participants, thanks to being at higher risk and more impaired to begin with, contribute as much as $200 divided by their 13.33% success rate = a $1500 average gain per success, their gain per participant will just as great as that for the voluntary group. In any case, as long as their average gain per participant is greater than their cost per participant, they are adding to the net value of the EHM investment by participating.
As long as the average success gain among default participants is positive, on average, the EHM client is ahead. By the same token, if the average success gain per voluntary participant happens not to be positive, due to their being “too” healthy in the first place, then their participation can be a drain on the overall gain when a default participation strategy is used. The only way to discover the effects of the default strategy is to use it and compare its results to that of voluntary enrollment options, both with and without incentives.
by JMoore
April 23, 2008 at 2:51 pm · Filed under Policy Makers, Consumer Engagement, Health IT, Transparency/Public Disclosure, Value-based health care
WHCC 2008 just wrapped up with a final keynote from Secretary Leavitt. Leavitt’s keynote was a progress report on the four cornerstones that have driven HHS under his leadership.
Cornerstone One: Standard Quality Measures
There has been a lot of quality metrics established, but agreement on the standards by which these will be measured is still a big challenge. Leavitt believes we are moving too slow. Currently, HHS is doing an inventory of the quality measurements they are currently using throughout HHS. They have identified 100 of them and will be going public with these measures this year.
Cornerstone Two: Standards for Cost of Care
Leavitt came down hard on healthcare costs and billing structure stating:
Our billing system in healthcare is insane.
He went on to draw an analogy between a consumer buying a car and a consumer buying knee replacement surgery going on to say we need to challenge the assumption that buying healthcare services is any different from other industries. Leavitt believes that current efforts striving for the perfect solution will never move us forward - he again stated we are moving to slow. We need to strive for good, not perfection. CMS is currently aggregating its cost for common procedures data and will make that publicly available to push the cost transparency issue forward. Getting back to that knee/car analogy, CMS covered the costs for 250.000 knee surgeries in 2007, the costs for those procedures will be made public this year.
Cornerstone Three: Interoperable EMR
Sees HHS steadily marching forward on interoperability. Quite proud of the establishment of CCHIT and the certification process used to insure EMR software is in compliance to interoperability standards. HHS, via it National Health Information Network (NHIN), will test flow of data among several systems by end of this year. Next year, he foresees this moving beyond test data to the flow of real data and scale-up.
While Leavitt recognizes the challenge of a broader NHIN and interoperability with fewer than 10% of small practices having an EMR system, he gave little concrete guidance on how to overcome this issue. They are looking to change the economic equation to promote adoption. What that equation will be remains to be seen, but I’d look to CMS as the prime leverage point.
One of his chief objectives this year is to see further adoption of eRx practices, which he will promote strongly. Currently looking to attach eRx requirements with physician reimbursement payment rule of he CMS bill before Congress.
Cornerstone Four: Incentives to Seek Value
He saved the fuzziest statements for this last cornerstone. Again, Leavitt promoted the need to establish standards for value metrics and incentives. Also emphasized the need for trust among all stakeholders to get this to work. The biggest challenge that HHS has uncovered here is that value and incentives are driven locally. Therefore, HHS’s role will be to establish the standards, and let the local community drive incentives. Chartered Value Exchanges, of which 14 have been awarded/funded to date, will be the mechanism to drive value and incentives at the local level. Goal is to have 50 opertational by 2010.
Leavitt closed his presentation by stating he sees the unbridled rise in healthcare costs as the biggest threat to our nation’s national economic security. Solving the healthcare puzzle is this generation’s challenge.
Analysis:
Yes, movement on Cornerstones One and Two has been glacial. Too many vested interests have very strong financial reasons to stall any progress on cost and quality transparency. While it appears that HHS will look to further leverage the clout of CMS, seems too little too late, unless of course the next administration picks up where Leavitt left off and pushes even harder to make this happen. In full agreement with Leavitt that we should strive for good enough and not perfection. Advocates for perfection are the ones truly stalling the process.
For Cornerstone Three, do believe that for all the complaining I have heard, all-in-all, CCHIT is moving the interoperability ball forward and EMR companies are structuring their solutions to comply. Now we just need to educate the physician. Here, HHS has fallen far short of the mark. For all the talk about wanting to drive adoption among physicians, adoption is still horribly low. Coupled with strong incentives to encourage adoption (CMS payment structure?) HHS could do more in educating physicians on what’s in it for them. The EMR market is still surprisingly fragmented, and even for me, an HIT analyst who covers this market for a living has a difficult time keeping up with all of them. Maybe CCHIT can provide some guidance here as well.
Corenerstone Four is my least favorite and was where Leavitt made the least clear statements. Defining value and structuring incentives around value is an extremely hard thing to do. The Chartered Value Exchange sounds like a re-branding of the failed RHIO concept and I don’t give these new exchanges any more chance of surviving than its predecessor. Secretary Leavitt, with all due respect, throw this one in the can and go with a three legged stool, afterall, a three legged stool is more stable anyway.
CIGNA & WellPoint to Make PHRs Portable in 2008
You heard it here first folks, CIGNA and WellPoint will make member data portable by end of 2008, following the lead of Aetna and UnitedHealth.
Sat in on the session, Critical Health IT, which had representatives of WellPoint and CIGNA talk about their consumer and broader health IT initiatives. During Q&A got a chance to ask both why have they not come forward with a public statement that they support the portability of a member’s PHR. (Note, during their own prepared remarks they gave somewhat dismal views of PHRs stating adoption has been a challenge). Both stated that they have every intent of making a member’s data portable. WellPoint and CIGNA are currently deploying the CCR standard internally to insure that the data will be portable and enable a member to populate a PHR of their choosing outside of their health plan. They also went on to state that this will be completed in 2008.
Towards the end of our exchange on this question, the WellPoint representative went on to state that they still have issues regarding privacy and releasing such data to a non-covered entity. GIGNA nodded in agreement. What a load of bull, particularly after WellPoint has had a few privacy/security breaches of their own.
Hey WellPoint, its my data, let me choose whether or not I wish to take the risk and stop being so damn paternal. Or is it, you just don’t want anyone between you and me? Watch out, you are about to be dis-intermediated.
And finally, thank you to the WHCC 2008 team for inviting me to attend what has been an excellent event. Your ability to bring together many of the leaders in the healthcare industry is to be commended. I have learned much in these two and a half days, so thanks again for the opportunity to participate.
John Moore is Managing Director of Industry Analyst firm, Chilmark Research
by Scott MacStravic
April 23, 2008 at 10:44 am · Filed under Hospital and Health System CEOs, Business of Health
When I began my healthcare career at Michigan Blue Cross many years ago, the hospital relations division where I worked made the discovery that appendectomies, hysterectomies and cholecystectomies in one modest-sized community in that state were unusually common. Staff investigators visited the community and discovered that its hospital’s only surgeon claimed to perform them prophylactically, to prevent problems, rather than wait to cure them.
The investigation concluded that the real reason for most of these procedures seemed to be related more to the surgeon’s need to pay off the mortgage on his expensive new home and boat, rather than to benefit his patients. With no other surgeons in on the hospital’s medical staff, there was no effective tissue or other peer review to hold him in check, but the investigation and resulting warnings to the hospital had the desired effect of significantly dampening the rate of surgery subsequently.
In a CBS Evening News story on April 21, the subject of bariatric surgery for obese patients was covered in some depth. One champion for this method of severe obesity reduction noted how much safer the surgery has become as its techniques have changed, and how much added benefit has been found in patients who have it. One surprise was the bypass of the stomach and attachment of the duodenum directly to the small intestine seems to “cure” diabetes virtually overnight.
A panel of eight patients had been assembled for this story, with all eight of them reporting that prior to their surgery, they were diabetes sufferers. But in some cases only days after surgery, and in all cases at some time afterwards, all eight no longer had the disease, and were no longer taking medications to control it. While the mechanism for this effect was not described, and may not be known as yet, even before they experienced any weight loss, which in most cases only took off about a third of the excess weight, they had gained a “reversal” of their diabetes.
It was also noted in the story that the success of stomach bypass surgery has a “success rate” in terms of significant reduction in obesity, and most particularly in keeping the weight off, of roughly 85%. This is roughly seventeen times the success rate for other methods of weight loss, where initial losses are common, but commonly associated with gaining most or all the weight lost within a year.
The combination of reducing patients from morbid or extreme obesity to mere “normal” obesity or even mere overweight status, i.e. of at least one BMI (body mass index) category, and keeping it off indefinitely, can be a big money saver for insurers and employers. Health care use and expenditures have been found to be roughly $382 lower for every BMI point of reduction. Since a BMI category equals five points, this would suggest annual savings, in medical, pharmaceutical, and disability claims alone, of five times as much, or $1910 per year for employers, and since the vast majority of these savings are paid by health insurance, they would be almost that much for insurers, as well.
The BMI connection with lower claims costs were amazingly uniform at all BMI levels, i.e. there was no “law of diminishing returns” in the levels of expenditure increase as BMI got larger. Moreover, the reported cost differences by BMI levels were reported seven years ago, using data that was even older. Given health care cost inflation since then, the savings could be twice that amount or more by now. [“The Impact of a Worksite Health Promotion Program on STD Usage” JOEM (Journal of Occupational and Environmental Health) 43:1, Jan 2001 25-29]
Since bariatric surgery costs roughly $25,000 (though insurers may pay significantly less if they cover it), the upfront costs of achieving such savings will be considerable. It is no wonder that insurers, in particular, are hesitant to pay for it, and commonly impose strict requirements as to how much overweight patients must be to qualify, and how long they must try to lose weight through other methods first. [K. Dunn “Bariatric Surgery at Tufts Health Plan” WorldHealthCareBlog.org, Apr 23, 2008]
Moreover, since insurers normally retain their members for only a few years, even savings of $5000 a year would not deliver a positive ROI in most cases for them. But employers might consider covering such surgery, given its higher success rate and far greater savings to them. They stand to gain not merely reductions in medical, drugs and disability expenditures, but savings in absenteeism and presenteeism as well, which are typically two to five times greater, altogether.
If even 50% of bariatric surgery patients gain a reduction of one BMI category and maintain that loss indefinitely, employers could save enough in just a few years to cover the costs of the surgery. Only predictive analysis based on their own workforce health and performance costs, and the contribution value of their employee assets, will enable them to make a reasonable forecast of their potential ROI and how long it would take to gain it, but employers, at least, might consider it a worthwhile investment.
As a long-term investment, it might even be justified by commercial and government insurers, as well. Commercial insurers might be willing to cover it based on how many of their members come to them from other insurers’ plans, and are already at lower costs due to obesity “cures” thanks to surgery. Medicare might consider the risk vs. reward potential of subsidizing or at least promoting bariatric surgery among populations soon to be their responsibility, rather than waiting until they actually are beneficiaries.
It is even possible that the combined savings potential in preventing both obesity and diabetes, to say nothing of other conditions, including cancer and arthritis, for example, that are far more likely among obese populations, could justify bariatric surgery as a preventive, i.e. prophylactic measure. Whether consumers would be willing to undergo such surgery merely to dramatically reduce their risks of obesity, diabetes, and their co-morbidities is open to question, though consumers have demonstrated a common preference for the “quick fix” compared to the rigorous lifetime self-discipline necessary to prevent weight gain or cure it after the fact.
I mention this possibility at least partially with tongue firmly planted in cheek. But insofar as employers and insurers recognize the constantly rising costs of obesity and the co-morbidities associated with it, together with their negative impact on workforce productivity and overall performance, there may be some justification for at least giving its reactive use some thought, if not its proactive potential, as well.
by Fred Fortin
April 22, 2008 at 1:50 pm · Filed under Uncategorized, Policy Makers, Transparency/Public Disclosure, Quality Measurement
The WHCC conference sessions on transparency in healthcare are demonstrating that this movement is way more than a passing fad. As all stakeholders in the healthcare system — private institutions, government agencies, health plans, employers, group practices, research organizations, online service companies — are all getting in the mode of how to open up the black boxes in healthcare to consumers and payers of all stripes.
What’s fascinating is is to witness not just the measures, programs and politics unfold, but also the evolution of the questions that are being asked. Reed V. Tuckson, MD, UnitedHealth Group observes, for example, that the question of what is the best hospital is morphing into the question of what is the best hospital for me and my particular medical condition.
Robin Downey, a Senor Vice President with Aetna argues that once consumers ‘get it’ about the usefulness of healthcare information, they just want more and more. With her health plan, the black box they are opening, is “what is it going to cost me to be a covered by Aetna?” This is not just about co-pays, and premiums, but also about what Aetna is paying to their contracted doctors and hospitals. So they are starting to disclose Aetna’s actual negotiated rates with their provider network. And people are surprised wondering if they are giving away their bread and butter, that is, proprietary information that they have spent considerable money to develop.
The bar for transparency is rising, and the market place is responding. Hang on.
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