What do these medical cost trends mean for your business?

The impact of rising medical costs: Mike Thompson addresses how employers are working to rein in health care costs.
Mike Thompson, Principal, Global Human Resource Services at PwC

Employers continue to wrestle with how much and what kind of strategies are most effective in reining in medical expenses The appropriate blend of incentives, cost shifting and wellness programs can help employees to stay healthy and productive.

Things employers should consider when assessing healthcare spending

  • Collect, analyze and act on wellness program data. Is your workforce getting healthier.
  • Personalize wellness messages and leverage mobile technology to give employees real time support.
  • Tap low-cost care options such as workplace clinics and telehealth that can improve health and reduce absenteeism.
  • Develop benefit plans with incentives to use services more wisely and engage in healthy behaviors. Value based designs are primarily intended to stretch healthcare dollars, but may not necessarily decrease actual costs.
Rethinking ways to squeeze costs from the system: Donald Snell discusses a change in the way costs are squeezed from the health care system. Previously the focus was on cutting costs from staffing and supply chain, but is now more patient-centered, looking to save through prevention and providing the right care in the right place at the right time.
Donald Snell, Executive Vice President, Chief Operating Officer, Lahey Clinic Foundation

Hospital reimbursement is being aggressively targeted for savings by both government and commercial insurers. Even as hospital systems push for rate increases, they know that what insurers really want is to avoid the hospital altogether.

How healthcare providers can prepare

  • Prepare for increased scrutiny and accountability. Make sure pricing is defensible. Take into account competitive services at free standing clinics.
  • Partner care models with reimbursement methods that reward value over volume. Maximize information exchange among different providers.
  • Develop a culture of collaboration, with providers, patients and family members. Teamwork will be critical in achieving lower Medicare readmission rates. To reduce readmissions, improve the discharge process with steps such as proactively scheduling follow-up appointments, educating patients and their caregivers, and initiating pill reminders.
  • Predictive modeling, incorporated into the electronic medical record, can help identify patients at higher risk for readmission.
New delivery models: Dr. Nirav Shah discusses the arrival of the information age in health care and how it has driven a focus on outcomes. He provides insight from a recent conversation with an accountable care organization (ACO) interested in pediatric obesity prevention, explaining how "shared savings" models have made public health and prevention a high priority in the clinical setting.
Nirav Shah, MD, MPH, Commissioner, New York State Department of Health

As health insurers brace for an anticipated rebound in utilization, they also need to closely monitor market perceptions that influence employers and policymakers. Rate hikes are now front-page news as insurers must disclose more information to the public and regulators justifying large rate increases.

How health insurers can prepare

  • Health plans need to better educate and empower consumers. To create more meaningful connections with customers, plans should consider pairing complementary products with insurance or reaching consumers in the places people frequent— hospitals, clinics, grocery stores, and retail outlets.
  • Build trusted relationships. According to HRI research, 11% of consumers will purchase insurance through state-based exchanges in the future, and few expect to purchase their insurance without help. Build trust by engaging consumers through mobile and digital communication. For an in-depth discussion on how social media is changing the nature of healthcare in the United States, see HRI's report, “Social media likes healthcare.”
  • Collaborate with stakeholders. Insurers should work with employers to improve benefit design, deploy behavioral economics, and enhance consumer engagement. Coordinating and analyzing healthcare information will be key to working with providers, as insurers hold vast amounts of patient data that improves care coordination.

To retain its share of medical revenues in an era of constrained growth, the pharmaceutical industry must pursue strategies that highlight the additional value a drug contributes to care. Emphasis will be on drugs that demonstrate cost effectiveness, such as avoiding additional doctor’s visits or minimizing adverse effects. For an in-depth discussion on pharma, read HRI's report, “Unleashing value: The changing landscape for industry".

How Pharma and life sciences companies can prepare

  • Strengthen capabilities to conduct health economic studies, “real-world” clinical trials, and better partnerships with diagnostic technologies to improve the pharmaceutical contribution to health system performance.
  • Team with providers and purchasers. Demonstrating outcomes will require robust data sharing across health organizations to collaborate on drug design and payment methodology.
  • Drug makers will need to continuously apply data and findings back to R&D processes, and evolve their evidence gathering and product launch strategy to emphasize education, adherence, and population health.
Behind the Numbers, 2013
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