An increasing amount of hospitals and health systems are directly contracting with large employers to serve consumers, but pulling together direct-contracted arrangements with large, sophisticated employers can be difficult, experts say. So, what are those health systems to do if they can’t assemble all the required pieces of a network, or find the sizable, concentrated employer willing to sign a contract? (Read more about direct contracting here.)
Because employers are fed up with skyrocketing costs and the slow march away from fee-for-service medicine, it’s important that a local health system demonstrate value to its potential customers, says Brian Marcotte, president and CEO of the National Business Group on Health. Otherwise, employers will craft new health plans that incent workers to go elsewhere.
The NBGH is now working to understand what exactly that value looks like, and is putting together a group of employers, payers and health systems to craft some recommendations. Demonstrating that value proposition is a good first step, whatever the circumstances in a hospital’s service area.
“Even if you are not direct contracting, if you can demonstrate value and that you are better than the market, then employers can use plan design incentives to encourage employees to access care through those better delivery systems,” he says. “I think that’s the opportunity.”
Some, such as Aurora Health Care in southeastern Wisconsin, have formed relationships with payers to sell ACO products to purchasers across the state. The system already has done so with about 275 employers, representing about 22,000 lives, enticing them with the opportunity to reduce costs by 10 percent in the first year. Scott Austin, senior vice president of commercial growth, says it was important to have the expertise of an insurer to analyze claims data, rather than trying to do it alone. Such arrangements need to be more than “just a grab for bodies to fill beds. It has to be that you are committed to lower costs for employers in your market.”
Other hospitals, meanwhile, are directly contracting with employers for a few select high-cost procedures. On the West Coast, for instance, the Pacific Business Group on Health has initiated what it calls the Employers Centers for Excellence Network, hoping to control costs on knee- and hip-replacement surgeries, Leavitt Partners notes in a recent report. Some 1.5 million employees and their dependents are able to access procedures at one of four health systems within the coalition. Travel and lodging costs are covered by the employer for visiting those centers, and the employees don’t have to pay a deductible or co-insurance. The employer makes up for those investments with a discounted, fixed rate for every such surgery.
Craig Enge, chief operating and administration officer of the Swedish-Providence Health Alliance, hopes that as health networks continue to build up data and lessons learned, the industry eventually can perform similar work with much smaller groups of employees. Whatever the situation in your market, however, he says it’s time to stop waiting.
“Just go,” Enge says. “The learning you gain along the way, you will never be able to get sitting and waiting for that opportunity. I just tell people, ‘Jump in.’ ”