Employers pick up 82% of the tab and are on the sidelines of value-based healthcare.

Employers bear an oversized burden regarding medical costs in the United States, and they’re often forced into suboptimal choices when doing so. A value-based approach to healthcare could change all that.

49% of healthcare coverage and 82% of healthcare costs in the US are employer sponsored. Those are staggering numbers. One would think that any group continuing to take on that much of the cost burden would receive tremendous value in return.

However, most employers face very tough choices between cost and access when they purchase healthcare benefits. They are asked to embrace this dichotomy while also receiving subpar service. They are then forced to deal with a constantly increasing cost curve that shows no sign of abating. In what other industry would the bearer of 80%+ of the costs have so little control over their outcomes and how they are serviced?

Value-based healthcare continues to be a concerted push in our industry and has shown real promise with some solid results. Here’s a question to consider – how has this 13+ year push into value-based healthcare improved the experience for employers? Here are some additional questions to consider as well:

  1. Value-based healthcare continues to be about health plans holding providers accountable. – Who is holding the health plan (or PBM) accountable?
  2. Our value-based healthcare models call out patient and healthcare provider staff satisfaction. – What about employer satisfaction? After all, they’re picking up 82% of the tab.
  3. When discussing a physician as a provider of healthcare services, we look for credentials and bedside manner. – Shouldn’t health plans and PBMs as healthcare service entities also have a great bedside manner?

Reimagining healthcare in a post-COVID era

As devastating as COVID-19 is, it also presents us with a once-in-a-lifetime opportunity to reimagine healthcare in our country. Our public health system has clearly not held up well. Additionally, COVID-19 has created a mental health tsunami like never before. The designers of our healthcare system, i.e., healthcare insiders (insurers, providers, etc.), cannot be singularly relied upon to drive that change. There are too many factors that would make any change from those entities incremental at best – shareholders and time-tested revenue streams are just two of those factors. They have little incentive to change anything. Transformational change in our healthcare system needs to come from employers.

Employers as healthcare benefit shoppers must be the driver of the next generation of transformation in our healthcare system. They must demand to be included in the value-based care conversation. A conversation that is ably powered by the clear expectations of the Institute for Healthcare Improvement (IHI) via the Quadruple Aim. I had discussed this in a prior article as well. You can find it here.

Aim #1 – Improving the health of the employee population in a targeted manner via an employer-tailored population health management solution. No more “one size fits all” clinical programs.

Aim #2 – Enhancing the experience of care for employees by offering greater access, lower costs, and a fantastic service experience from the healthcare service provider (health plan or PBM). Improved access to care should be sacred in any reimagining of our healthcare system.

Aim #3 – Reducing the per capita cost of healthcare via pay-for-performance models, where the healthcare service provider (health plan or PBM) treats the employer’s pocketbook as if it were their own. Value in healthcare benefits requires financial alignment.

Aim #4 – Staff satisfaction as an informative aim. If satisfied employees equate to satisfied customers, isn’t it imperative for the healthcare service provider (health plan or PBM) to have a very strong culture and very satisfied employees as well?

Value-based benefit shopping checklist for Employers and Benefit Advisors

Expecting and purchasing value-based instead of volume-based benefits require employers and their benefit advisors to shun the same old solutions that simply don’t meet their employees’ and members’ needs. Here’s a checklist of items to consider when evaluating a value-based offering:

  1. Healthcare costs and premiums will continue to soar at an incredibly high rate. Look for solutions that guarantee cost savings and trend management, and hold the healthcare service provider (health plan or PBM) financially accountable for those guarantees. Proving those cost savings is where transparency is important.
  2. Look past historically normal and uninspiring solutions that have either existed for a long time or are being repackaged and called something else. Demand a change – the same old tired solutions are not going to deliver different results.
  3. Cost and access are not mutually exclusive. As the entity picking up 82% of the tab, you should demand reduced cost and improved access. Don’t get sucked into this artificial dichotomy.
  4. COVID-19 related challenges are overwhelming by themselves without having to deal with suboptimal service. Don’t let the same old lousy service remain unchecked – it is imperative that a healthcare service provider (health plan or PBM) has a great bedside manner.
  5. Traditional and transparent/passthrough PBM models are still volume-based. When volume goes up, the PBM does better and the employer does poorly. Does the PBM’s income depend on your financial outcomes – i.e., is there financial alignment?
  6. The patient will always be at the center of healthcare. Any solutions that you purchase should be evidence-based, clinically robust, and obsessively focused on ensuring the health and wellbeing of your employees.

For employers to truly drive healthcare transformation in our country, they must first and foremost get engaged in the conversation. When employers put a stake in the ground and demand change, we will finally see value-based healthcare live up to its promise.


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