Cost center managers tend to lay low during times of change, but not Stephen Mooney. The latent entrepreneur in 2008 proposed the idea of splitting off the patient financial services division of Tenet Healthcare into a stand-alone company to take advantage of an opportunity he saw in the marketplace and to capitalize on the strong relationships already in place with Tenet's network of hospitals.

To understand what Mooney faced getting this idea off the ground, consider Tenet’s situation:  The organization was in the midst of selling more than half of its 110 hospitals when he floated his idea by Tenet’s CEO. That meant significant change, and during a time when organizations typically are hesitant to champion new start-up initiatives.

“My idea didn’t have a lot of fans at first, but it did get our executives thinking about the future instead of our current dilemma,” says Mooney, who serves as president and CEO of Conifer Health Solutions LLC, a subsidiary of Fortune 100 company Tenet Healthcare.

Mooney was convinced that health care organizations would jump at the chance to boost revenue cycle performance and focus on patient care instead of billing and collections. So Mooney sold his vision to everyone he encountered, turning a $200 million cost center into an outsourcing success story, adding some 7,000 employees and 600 clients in just five years. Here’s how he did it.

 

Build a strong foundation

Providing revenue management to non-Tenet hospitals and health systems would require a hefty investment in technology, a cultural shift as well as the development of a sales and marketing arm. Still, Tenet execs were intrigued by the idea and pledged their support if Mooney could find some way to fund his revolutionary venture.

“My initial forecast had us losing money for the first two years,” he says. “Under the circumstances, the company couldn’t afford to lose a single dime. And since venture funding wasn’t an option, I had to find the cash in our operating budget.”

With the executive team behind him, Mooney set out to achieve buy-in from other constituents. He alleviated any concerns by sharing his vision and offering each group a customized slate of benefits. Servant leadership and creating vested partnerships was his goal.

For example, he grandfathered existing rates during the initial transition period. And, he lowered the cost of processing rudimentary transactions by offshoring selective technology and call center services, using the savings to build a robust technology platform.

“We’re not a tech company, we’re a tech-enabled company,” Mooney says. “I needed to enhance our IT platform so we could drive more volume through our machine and offer our clients greater efficiency and value.”

Next, he approached Tenet’s suppliers and asked them to partner with the company. Could they make near-term concessions by thinking long term?

“I shared my business plan with our suppliers,” he says. “I wanted them to see that they had the opportunity to grow with us if they were willing to reduce their fees. Plus, you need to establish strategic alliances from the outset because you’ll need them to manage growth.”

Tenet’s suppliers recognized the opportunity and jumped on board. But after several years of change, Mooney knew his larger task would be with his own team members.

“Getting this thing off the ground would take a lot of work, so I absolutely needed our employees’ support,” Mooney says. “You need to make sure that everyone’s behind you before you start approaching customers.”

Mooney emphasized the benefits of growth to garner support from workers. Having the opportunity to control their own destiny and career opportunities were his main selling points.

“I had to explain my vision to employees, get them engaged and help them understand that short-term sacrifices would yield long-term gains for them and also add tremendous value to our external clients," he says.

Mooney credits his team’s enthusiasm and willingness to embrace change with Conifer Health’s early financial success.

“We were supposed to lose money in the first year and to everyone’s surprise, we actually broke even,” he says. “I credit employee engagement for allowing us to achieve a budget-neutral position in our very first year.”

 

Hit a home run

Convincing a prospect to relinquish operational control of vital functions like billing and patient communications isn’t easy.

Mooney and his sales team made ends meet by selling point solutions while devising a strategy to close their first major end-to-end outsourcing deal.

“We bought time in the first year by hitting a few singles and doubles, but we needed to land a big fish to prove our concept,” Mooney says.

“Our executives were wondering if this was going to work, but health care organizations were wary of turning over their entire business office to an outsider from Mars.”

The sales team set its sights on landing a major deal with a member of a faith-based, not-for-profit system. Mooney knew that signing a member of this prestigious fraternity would encourage others to follow. But he and his team would have to sway a host of skeptical attorneys, consultants and stakeholders to ink their illusive inaugural deal. They emphasized their industry experience, their servant leadership model, and cultural alignment.

The looming impact of the Affordable Care Act finally proved to be the tipping point, as Conifer Health signed a number of major deals including a long-term agreement with Catholic Health Initiatives (CHI) to provide revenue cycle services for 56 hospitals across the nation.

“Even CHI's consultants agreed that their current model was unsustainable given the changes under health care reform,” Mooney says. “The market was aligning with partners and we finally convinced our prospects that they couldn’t wait to act.

 “All I can say is don’t give up,” he says. “Our first deal died more than once, but I remained involved, and we continued to push the benefits that mattered to our prospects like improving the patient experience and the revenue cycle until the timing was right.”

 

Close service gaps and accelerate growth

Mooney worried that Conifer Health might lose its competitive edge given the massive changes imposed by health care reform. He hired experienced leaders, invested $200 million in the firm’s technical infrastructure and paid another visit to Tenet’s CEO where he presented a plan to leapfrog Conifer Health past its competitors.

“The market was in a state of flux due to health care reform,” he says. “Clients wanted turnkey solutions, and we needed to close a few service gaps to help them transition from a fee-for-service to a fee-for-value environment. The question became, ‘Should we build or buy these capabilities?’”

Mooney proposed a series of strategic acquisitions, and this time he not only garnered support, but funding from Tenet’s executive team and board.

In recent months, Conifer Health has added new services like clinical integration, population health management and financial risk management to its arsenal as well as data modeling and analytics. In the process, the firm has acquired a host of new clients and employees.

While acquisitions can boost revenues and a firm’s capabilities overnight, assimilating an outside organization can be tricky. Depending on whose research you believe, mergers have a failure rate of anywhere between 50 and 85 percent primarily due to a lack of cultural compatibility and the hasty departure of key employees who possess critical institutional knowledge.

Mooney has been successful in assimilating acquisitions by getting Conifer Health’s acquired companies to embrace his unique philosophy and vision for the company.

“We try to retain or find other opportunities within Conifer Health for everyone we acquire,” he says. “If we do lay someone off, we give them severance and outplacement assistance because everyone deserves the right to leave with dignity.”

He’s created new business units within Conifer Health to help him retain key leaders and staff from an acquired firm. He’s also bolstered retention by allowing employees to telecommute as Conifer Health expanded its footprint to more than 40 states.

“The key is empowering people to make decisions so they can serve the client,” Mooney says. “We’ve expanded what we offer our clients, and they’ve embraced them because they add value to their mission and their communities. I keep our staff engaged by relaying our success stories. That's critical feedback as it validates the work they provide our client every day.”


Takeaways:

  • Build a strong foundation before you approach customers.
  • Prove your concept by hitting a home run.
  • Close service gaps and accelerate growth. 

 

The Mooney File:

NAME: Stephen Mooney
TITLE: President and CEO
COMPANY: Conifer Health Solutions LLC 

Birthplace: Margate, N.J. 

Education: Bachelor’s degree in accounting from Stockton State College in New Jersey and a master’s degree in business administration with an emphasis in accounting from Pepperdine University. 

What was your first job and what did you learn from it? I restocked the ice cream vendor on the boardwalk of the Jersey Shore. I learned that every person is important because the business couldn’t operate without a runner. Plus, it taught me responsibility because I couldn’t take a day off unless I found someone to take my place. 

What’s the best advice you ever received? Put people first because it increases their engagement. In turn, they’ll take care of your customers and the bottom line. For example, we let people go home when an ice storm is approaching and they make up for it the next day. They respond because we trust them to do the right thing. 

Who do you admire most in business and why? Jack Welch, former chairman and CEO of General Electric, because he was incredibly focused and a great developer of people and leaders. 

What is your definition of business success? Your business is successful when it’s turning on all cylinders, and it’s sustainable. In other words, you could walk away, and it would just keep going. We’re not there yet because we’re only a five-year-old company, but I believe that we’re on the path to sustainability.

 

Conifer Health Solutions Social Media Links:

Twitter: @coniferhealth
LinkedIn: http://www.linkedin.com/company/conifer-health-solutions

 

How to reach: Conifer Health Solutions LLC (877) 266-4337 or www.coniferhealth.com

 

Published in Dallas

Health care cost transparency is the ability of patients to learn how much a medical service or treatment costs, preferably before receiving the service or treatment. This is important because treatment and service costs vary widely from doctor to doctor and from facility to facility.

“In all my travels, with all the different hospitals I visit — hundreds of them — only one had the general charges of fees and services, like cost per day in the hospital, posted up on the wall. It just doesn’t exist today,” says Mark Haegele, director, sales and account management, at HealthLink.

“This system has made it difficult for people to get the information. We’re getting there, but a spotlight on transparency and the cost and options gives people a little more decision-making authority,” he says.

Smart Business spoke with Haegele about the shift toward transparency and helping employees shop for better health care prices.

Why do health care prices vary so much?

Physicians are just trying to diagnose you to help you get better. In addition, surgeons only get paid if they recommend surgery. So, cost doesn’t really weigh into whether patients get knee replacement surgery or are sent to therapy for six months.

If you go to a store and look for a refrigerator, one of the first things you try to figure out is the price. But if you go to the doctor, and you’re talking about getting your knee replaced, that conversation — if it ever comes up — comes up at the very end.

The average treatment for heart failure might vary by tens of thousands of dollars within the same city. A list of Medicare costs, released by the Centers for Medicare & Medicaid Services, found a difference of $21,000 to $46,000 in Denver, Colo., or $9,000 to $51,000 in Jackson, Miss.

Only some rate differences are because of health care’s complexity. If two people with the same insurance get a tonsillectomy at the same hospital, they still could have different doctors ordering different levels of anesthesia and pain medicine with different philosophies on hospital-stay length.

How does transparency lower costs?

As the government, media and patients push for reliable cost and quality information, it motivates the entire system to provide better care for less money. For example, according to the book “Unaccountable: What Hospitals Won’t Tell You and How Transparency Can Revolutionize Health Care,” the governor of New York mandated that hospitals publish their mortality rates for heart surgery. By the year following, hospitals started implementing quality metrics to reduce mortality, and the trend in the mortality rates dropped dramatically, which ultimately saved lives.

In another instance, a Thomson Reuters study of a Chicago employer found a cost variance of 125 percent for health insurance members receiving an MRI of the lower back without dye, with similar differences in diagnostic colonoscopies and knee arthroscopy procedures. If employees were given information to select providers at or below the median cost, it was estimated the company could save $83,000.

What can benefit administrators do to help facilitate transparency?

As a general rule we feel helpless, but there are some things benefit administrators can do to move costs. You’ve got to get information out to members, and then align incentives. The average member, once he or she meets the $2,000 out-of-pocket maximum, for example, doesn’t care if a hip replacement costs $5,300 or $223,000. They should — but most don’t make better purchasing decisions until it impacts them.

Under a self-funded health plan, you have more control over what you are able to publish and demonstrate to employees, as well as more ability to align incentives. But regardless, you need to start identifying costs of providers of key procedures to treat your health plan like an asset.

By putting together a best-in-class grid for your members, and then aligning incentives to ensure they use the lowest cost providers, such as giving a $200 gift card, you can empower your members and move the needle on health care cost.

Mark Haegele is director of sales and account management at HealthLink. Reach him at (314) 753-2100 or mark.haegele@healthlink.com.

Website: Visit the website to learn more about transparency and other key health care business trends.

Insights Health Care is brought to you by HealthLink

Published in Chicago

Holding the line on health care costs has long been an ongoing concern of insurers, employers and consumers. In recent years the use of value-based networks for providers has become more popular. These networks are also sometimes referred to as narrow, tiered or high-performing networks.

Essentially, value-based networks encourage members to utilize the more efficient providers — meaning hospitals or physicians — by either narrowing networks, or by lowering copayments or deductibles for providers in different tiers in the network.

“Value-based networks are a variation on the long-established practice of having one level of benefits for in-network providers and another level for those out of network,” says Andrea Gioia, executive director for Product Innovation at UPMC Health Plan. “The difference is, with a value-based network the member can choose the providers he or she prefers based on the criteria that are most important to him or her.”

Smart Business spoke with Gioia about how value-based networks can make sense for employers who are looking to reduce health care costs.

How does a value-based network system work?

A value-based network system is an attempt by insurers and employers to contain costs by offering health benefits plans that offer employees a real choice. Depending on the provider they choose, the employee may be able to pay lower copayments or have a lower deductible.

More financial responsibility falls on the member in terms of decision-making and, as a result, this should encourage initiatives that will provide better information about the cost and quality of health care in order to make more informed decisions.

The health insurer makes the determination about which tier hospitals or physicians will be on. This could be based on the rates the insurer is charged, as well as the quality and efficiency of care being offered. With a value-based network system, when an insurer saves money by getting lower rates from certain hospitals, those savings are passed along to the member in the form of lower out-of-pocket costs such as a lower copayment or a lower deductible.

Quality is determined through claims-based methods, external certification and health information technology.

Why are value-based network systems becoming more available?

A lot of factors are at work, including the fact that there is a demand for more consumer-driven options. Certainly, employers as well as employees are increasingly interested in finding ways to contain health care costs and hold down the cost of premiums. Value-based networks can deliver in both areas.

What could be the consequences of value-based networks?

Ideally, a value-based network system should engage its members in the process. Members have more incentive than ever to be involved in choosing providers and treatment because they are exposed to higher out-of-pocket expenses.

In addition, this could spur competition between providers to cut costs and raise quality standards in order to avoid landing on the higher-priced tiers. Estimates have indicated that tiered products, on average, are priced 10 to 15 percent lower than non-tiered and HMO products.

Health insurers tend to support value-based networks because it gives consumers skin in the game. The consumer will have a financial interest in health care decisions beyond the cost of a premium.

Can value-based networks impact quality?

When a provider’s tier is tied to quality, the potential is certainly there that a value-based network will not only encourage better value but also drive providers to perform better and more efficiently. As cost and quality information becomes more available to consumers of health care, the more likely it will be that consumers will base their health care decisions on this information. This has the potential to drive change in health care in a positive direction.

Andrea Gioia is an executive director, Product Innovation, at UPMC Health Plan. Reach her at (412) 454-8293 or gioiaam@upmc.edu.

Save the date: Join UPMC WorkPartners for an upcoming webinar, “Keys to a Successful Health Management Incentive Program,” at 10 a.m., June 27. To register, contact Lauren Formato at formatol@upmc.edu or (412) 454-8838.

 

Insights Health Care is brought to you by UPMC Health Plan

Published in National

With employers facing ever-rising health insurance premiums, most are looking to control costs.

They may increase co-pays and deductibles, or decrease benefits. But there are other steps to accomplish that goal without impacting benefits or increasing employees’ costs, says Mark Haegele, director, sales and account management at HealthLink.

“Lowering the cost of health care is driven by managing utilization,” Haegele says. “There are a number of things in your data covering members’ use that you can address to help control costs. Too often, people are not educated about alternatives to the emergency room.”

Smart Business spoke with Haegele about how to lower the cost of health care without modifying benefits.

Where should employers start?

From 1996 to 2006, the annual number of U.S. emergency room visits grew from 90.3 million to 119.2 million, and from 34.2 to 40.5 visits per 100 residents. So, look at emergency room usage and other high utilization data points to identify trends. By focusing on those areas, you can ultimately have an impact.

Identify if overuse of the ER is an issue, and, if it is, what is driving it. Then you can implement action plans to lower costs for that high-cost category.

What should an employer be looking for?

Over the last three years, has the number of visits per member per month gone up year after year? And, has the cost per member per month gone up year after year? If yes, ask why.

Look at frequency of visits per person to identify whether a subset is going to the ER 10 or more times a year. If yes, determine how to address those people. Do you need case management nurses to help them find a better path to care? Do they need help finding a primary care physician? Can you educate them on alternatives?

Also, look at the reasons for ER visits. There are two categories — symptom, injury or poisoning, and disease and virus. If someone breaks an ankle, that person is going to the ER. But the disease and virus category is a different story. More than 60 percent of ER visits are for things such as sinusitis, flu, cough, headache, etc. This category can be managed.

Twenty-four hour nurse lines, urgent care clinics and clinics in pharmacies all are lower-cost alternatives. The cost of the ER averages $800 to $900, versus $65 to $150 for the alternatives. If more than 50 percent of ER visits fall into disease and virus, you know where to focus your energy to modify utilization and create awareness.

Emergency room management: Getting care when you need it quickly. Learn when to use the ER, or not.

How can employers create that awareness?

Education is No. 1. Post information, do emails blasts, distribute articles, do payroll stuffers, anything you can to get the word out.

Many employers have penalties, so if an ER visit is not a true emergency under the plan design, it doesn’t pay. But hospitals have ways of getting around that. Typical plan designs waive that penalty if a patient is admitted. Guess what? Now your admissions just went up.

A better approach is to educate people. And explain that if the ER coinsurance is $150, that’s $150 out of their pocket, whereas at an urgent care center the cost is much less. And often the wait is shorter. Sell your members on appropriate lower levels of care that are more easily accessible, less expensive and more convenient.

How do hospitals play into the equation?

Hospitals code ER visits from one to five, with five being the most severe, but some hospitals never code lower than three. As a result, if employers identify overcharging for ER visits, address the issue with the hospital.

The employer, with the insurance company, can co-write a letter with the high coding data, while asking the hospital to reconsider the way it’s coding ER visits and to consider establishing an urgent care center for lower level visits to the facility. One letter isn’t going to result in a new facility, but it does create awareness, and often coding starts to be more appropriate. The employer, the hospital, the member and the insurance company have to work together, as they all have a stake in the game. Everyone shares equal responsibility in managing this.

Mark Haegele is a director, sales and account management, at HealthLink. Reach him at (314) 925-6310 or Mark.Haegele@healthlink.com.

Insights Health Care is brought to you by HealthLink

Published in Chicago

Transparency in health care means allowing consumers to have both cost and quality information for services delivered by health care service providers. In health care, this kind of information has been largely invisible and unknown to consumers, including employer groups. Many believe this lack of information is a factor in high health care costs.

In recent years, both health plans and employer groups have been supportive of the concept that directly engaging consumers in decision-making can help to reduce costs. And, in order to engage consumers, they must be informed about costs and quality of services.

“Transparency enables consumers to compare both the cost and the quality of health care treatments,” says Dr. Stephen Perkins, vice president of Medical Affairs for UPMC Health Plan. “Those two pieces of information are essential. That is the only way they can truly make informed choices among doctors and hospitals.”

Smart Business spoke with Perkins about transparency and its possible effects on health care and health care costs in the future.

Why is transparency important?

First, for providers, it benchmarks their performance, thereby giving them a way to measure their performance against others and, consequently, make improvements. For insurers, it provides a way to recognize and reward quality and efficiency in the delivery of health care. And, finally, it provides a way to help patients make more informed decisions about their care.

In addition, the cost of procedures can vary dramatically by facility, and often the consumer has no idea of the price differences. At present, health care may be the only industry in which consumers are expected to purchase a service without fully knowing the cost or quality of what they are getting. Most consumers who are part of an employer’s health plan have no idea about the cost drivers that determine the premiums they pay.

How can transparency affect health care costs?

At present, consumers are largely unaware of the price differences that exist for the same services from different providers. They have little idea about the cost of just about anything connected to health care, with the possible exception of co-payments. Consumers certainly have a right to know the quality and cost of their health care. Through health care transparency, consumers can get the information necessary to be able to make choices based on value. Reliable cost and quality information is essential to making choices. In theory, consumer choice should create incentives at all levels and motivate the health care system to provide better care for less money. When providers compare themselves to one another, this can begin a process that could lead to improvements in care and reductions in costs.

For almost all other purchases, consumers can readily get information about price and quality. This has always been presumed to be the basis for making intelligent choices that make sense economically. It would seem logical to assume that will be the case with health care as well.

Certainly, it makes sense that engaging individuals to be more responsible in managing their health and in purchasing health care services is a necessary first step to curbing costs in health care.

What about the differences between health care purchases and other purchases?

There are certainly differences. For one thing, consumers might be inclined to automatically associate cost with quality, when that may not necessarily be the case. In addition, it is not always possible for health care decisions to be made following a slow and deliberative process. These decisions are often made under emergency conditions and at times of high emotional stress.

What kind of consumer tools can be effective to ensure transparency?

In order for consumers to get information that is most useful, they would need to know data that is derived from actual claims. That way they see what actually was paid to the hospital for a certain procedure, for instance. They can use that information to determine, for example, what the cost of a certain procedure was in several different hospitals in the area. But consumers have to know not just how much a procedure costs but also the total cost of caring for a given condition.

How will health plans be involved in transparency efforts?

Health plans will be essential to transparency efforts because they have the capacity to make price and quality information available at the local level and they can offer consumer-directed plans for employers and individuals.

Health plans have the capacity to show comparisons of price, quality and efficiency. They are interested in transparency because providing quality and price information to consumers in a way they can easily access and use is also a way to build trust with members.

Why would providers support transparency?

Transparency data will allow providers to improve by benchmarking their performance against others. It encourages private insurers and public programs to reward quality and efficiency. And, it helps patients to make more informed choices about their care.

There will be concern, of course, that consumers might, at least initially, be confused by the new information, but essentially, transparency is seen as something that will certainly become a benefit to consumers.

Dr. STEPHEN PERKINS is vice president, Medical Affairs, for UPMC Health Plan. Reach him at (412) 454-7682 or perkinss@upmc.edu.

Insights Health Care is brought to you by UPMC Health Plan.

Published in Pittsburgh

From greater flexibility to lower costs, self-funded insurance is attracting the attention of more and more employers.

“Self-funding plans have been gaining popularity as a way for companies and employees to save money in the face of the recession, recent health care reform and increasing health care costs,” says Mark Haegele, director, sales and account management, for HealthLink. “Health care reform adds a number of taxes and restrictions on fully insured companies that those on a partially self-funded basis are typically able to avoid.”

Smart Business spoke with Haegele about how you can manage a self-funded plan to ensure your company gets the most out of its health care expenditures.

What’s the difference between a self-funded and a fully insured health plan?

With self insurance, or self funding, the employer assumes the financial risk of providing health care insurance. Typically, the company sets up a trust of corporate and employee contributions that are administered in house or subcontracted to a third party. A company can either hire a third-party administrator (TPA) or do the administration itself to save on fees that would normally go to an insurance company. A TPA can also take on fiduciary responsibility with reinsurance to further protect the employer.

When an employer is fully insured, it pays a fixed premium to an insurance carrier that assumes all of the risk.

Why would an employer choose to self-fund?

There are a number of reasons to go with self-funded insurance, and flexibility is one of the biggest selling points. For example, Company A can choose to exclude bariatric surgery on its health plan and Company B can include it, depending on its employees’ specific needs. In Illinois, the state mandates that fully insured businesses must pay for bariatric surgery, so only with self-funding do businesses have the ability to choose.

In another example, under self-funded insurance, an employer can identify disease prevalence and assign benefits to accommodate its employees’ specific needs. So, if an employer discovers a higher incidence of asthma and diabetes in its employee population, as a self-funded employer, it can choose to pay 100 percent of all of the services required to manage those illnesses. This keeps employees healthier — and out of the costly ER and hospital — by ensuring they maintain their treatment protocols for that particular illness.

It’s about identifying the makeup of the employee population, and designing and building self-insured plans to really support that population’s needs; you’re not stuck in a box of what you have to provide, based on what the state mandates or on your insurance company’s systems.

In addition, you can maximize your interest income on premiums that would otherwise go to an insurance carrier, and you can avoid prepaying for health care coverage, improving your business’s cash flow.

Finally, self-funded insurance is only subject to federal law, not conflicting state health insurance regulations and/or benefit mandates and state health insurance premium taxes, which can account for 2 to 3 percent of premium costs.

How common is self-funded insurance and how can a company determine if it is the best option for its needs?

Approximately 50 million employees and their dependents receive benefits through self-insured health plans, which accounts for 33 percent of the 150 million participants in private employment-based plans nationwide, according to the Employee Benefit Research Institute in 2000.

There’s a myth that self-funded insurance is not cost effective for employers with fewer than 1,000 employees. However, there are many TPAs that offer partially self-funded programs for companies with as few as 10 employees. In most states, including Missouri and Illinois, health care is a guarantee issue for plans with fewer than 50 lives. This means if you have 50 or fewer employees and you try self-funded insurance but it doesn’t work out, health insurance carriers must allow you to have fully funded insurance the following year.

However, if you have between 50 and 100 employees, you need to truly understand your risks because returning to a fully funded plan from a self-funded plan could increase your rates dramatically. Make sure that you have a trustworthy broker and/or lawyer review the plan you’re going to participate in before making your decision.

If a company assumes the risk of self funding, how can it protect itself from a catastrophic claim?

You can purchase stop-loss insurance for reimbursement of claims above a specified amount through a TPA. Only the employer is insured, not the employees or health plan participants, which means you can avoid most insurance taxes.

There are two types of stop-loss insurance, which acts as reinsurance:

  • Specific stop-loss provides protection against a high claim on any one individual. The rule of thumb is $10,000 if you have 10 employees, $20,000 if you have 20 employees, etc.
  • Aggregate stop-loss offers a ceiling on the amount of eligible expenses an employer would pay, in total, during a contract period. The carrier reimburses the employer at the contract’s end for aggregate claims.

You also can use TPAs to help decrease your risk. A TPA will have existing affiliations with health care networks to help manage the plan and save the most money. TPAs can also help manage the increased complexity of self-funded insurance.

Self funding is more viable than ever for employer groups with as few as 10 employees. Right off the top, employers save 3 to 5 percent of the total cost of their health plan through insurance companies’ risk charge and profit, coupled with the other advantages of plan design flexibility and additional tax avoidance associated with health care reform.

Mark Haegele is a director, sales and account management, for HealthLink. Reach him at (314) 753-2100 or Mark.Haegele@healthlink.com.

Insights Health Care is brought to you by HealthLink®

Published in Chicago

Every employer is facing increases in the cost of health care, which are a function of price, utilization and intensity. And with every employer looking for ways to lower costs, imaging services are a prime target. Imaging services such as MRIs are one of the fastest-growing components of health care; and there are opportunities to help identify and limit all three cost drivers.

“High-cost imaging is something that you, as an employer, want to keep your eye on because it’s trending higher, typically, than the rest of your categories of care,” says Mark Haegele, director, sales and account management at HealthLink. “But the great news is that this is an area that you can control and you can manage.”

Smart Business spoke with Haegele about why imaging services costs are increasing faster than other health care areas and what employers — particularly self-funded employers — can do about it.

What is high-cost imaging and why is its use increasing?

Imaging services are tests such as X-rays and ultrasounds, as well as high-tech imaging including MRIs, CT scans, PET scans and nuclear cardiac imaging.

While some experts say that imaging growth has slowed in recent years, it’s still one of the fastest-growing segments of medical costs, accounting for nearly 15 percent of all health care costs, according to Blue Cross Blue Shield. As an employer, your inpatient costs may be consistent year over year and your physician costs might be consistent year over year, but for many employers, imaging costs are trending much higher than those in other areas.

How can employers address increasing use and cost?

Most managed care companies have drastic variations in their imaging contracts with providers within their network. At Hospital A, the cost of a MRI might be $600, while the cost of that exact same MRI at Hospital B, right down the street, is $4,000.

The discrepancy exists because, as managed care companies negotiate with hospitals, there is give and take on each type of care, from inpatient to outpatient to emergency room to imaging.

Hospital A may have offered the managed care company a good deal on MRIs in return for higher outpatient surgery costs, while Hospital B might need less income from its outpatient surgery but a higher MRI rate. Employers and employees are typically in the dark about these variations within a network.

In addition to educating employees on how to choose where they get their imaging services, you can align incentives or bonuses to drive employees toward lower-cost options. For example, if employees know their MRI co-pay is $25, do they really care if the MRI costs $600 or $4,000? The two MRI choices are both top-quality providers, and more than likely the exact same machine. But if you, as a self-funded employer, can offer the employee a $100 gift card if he or she chooses the $600 MRI location over the $4,000 location, your company saves more than $3,000.

How can employers help control overutilization of imaging services?

Overutilization issues often arise when there is no continuity of care by employees. An employee might go to a doctor and get a CAT scan at one hospital, but the next hospital doesn’t get the employee’s records, so the same test may be repeated. Overutilization occurs most often with aliments that are hard to diagnose, and in cases in which patients are constantly going in for tests for ailments such as migraines or for sleep studies.

Employers should use comprehensive case management to identify employees who have no continuity of care and/or have chronic problems that are most likely to result in overutilization. By managing health care cases closely, employers can help employees identify and retrieve previously done tests.

In addition, education can result in a decrease of utilization. A recent National Imaging Associates study found that a large percentage of MRIs are ordered to meet patient demand rather than to meet a true diagnostic need.

What is intensity of imaging services and what opportunities exist for employers to decrease these costs?

Intensity is when employees receive PET scans, when their problem could have been diagnosed with CAT scans. The intensity level of the service is higher than it needs to be, and therefore, the costs associated with that are higher than they need to be.

There are doctors who automatically run all MRIs, which translates into thousands of dollars, when they could have first run a CAT scan, which, in comparison, costs hundreds of dollars. For example, more than 10 percent of chest CT tests are ordered with no claim evidence of a previous plain film of the chest, according to a National Imaging Associates study.

In a self-funded environment, through physician profiling and comprehensive medical management, you can help reduce inappropriate intensity levels of services to employees. There are imaging programs in which employees call to pre-certify services, and if a higher level of care was ordered than is necessary, that can be managed down to a lower level of care.

By looking at all three factors — price, utilization and intensity — employers and employees can work together using benefit design, education and aligned incentives to lower the cost of imaging services.

Mark Haegele is director, sales and account management, at HealthLink. Reach him at (314) 753-2100 or Mark.Haegele@healthlink.com.

Insights Health Care is brought to you by HealthLink®

Published in Chicago

Your company offers medical benefits, and it offers pharmacy benefits. But if you are not integrating these two components, you may be spending more than you need to, says Mark Haegele, director, sales and account management at HealthLink.

“Having both data sets boosts your ability to see the whole picture of your members and your costs,” says Haegele. “It really opens the door for new opportunities to control costs. If you just have the medical claims data, or just the pharmacy claims data, that only gives you part of the picture. But when you integrate that information and tie the pharmacy claim information into the medical claim information, then, all of a sudden you start to see the full story relative to specific members and, in particular, specific cost variances. And that really opens the door to do some pretty creative things with information, ultimately allowing you to control costs.”

Smart Business spoke with Haegele about steps an employer — particularly a self-insured employer — can take to manage health plan costs.

Why should employers integrate medical and pharmacy claims data?

Having that data under one umbrella can help improve care by creating a complete picture of a member’s health. Integration increases the identification rate for chronic conditions and care management programs as a result of improved access to key data.

It allows for better case management, increasing the likelihood that patients will receive the correct medication at the right time, avoid negative drug interactions and help members comply with prescribed therapies. In addition, patients with chronic diseases often do not get the help they need, resulting in more severe and costly complications, and higher rates of diseases and death.

How can an employer use integrated data to manage costs?

If you combine your pharmacy and medical data, you can then sort your data by members who have more than five prescriptions per year. You can further refine that information to determine from how many different physicians a member may be getting a single prescription.

For example, oxycodone is a very common concern in the marketplace, and an employer may have health plan members who are getting that prescription from five different providers. Without that integrated data, you wouldn’t know that. But by targeting controlled substances, you can identify those who are abusing the plan and then, in conjunction with your consultant or broker, notify those prescribing physicians so that they become aware of that situation.

Employers are often shocked to learn what is in the data. A plan member who is getting 15 or 16 prescriptions per month from 10 different doctors is clearly problematic, and identifying those people can help you control your costs.

What other action can an employer take using integrated data?

The second specific action that employers can take to control costs is to look at the use of antidepressants. This is a high-cost category, often in the top three most used prescriptions, which presents an opportunity.

Antidepressants are generally intended to get a person through a tough time, for example, as the result of a death or a highly stressful situation. Most are not really intended for chronic continuation for multiple years. When an employer has the data, it can identify those members who have been on antidepressants for more than a six-month period. Then you can introduce that member to a case manager, or into an employee assistance program, or refer that person to a psychiatrist for one-on-one therapy. Oftentimes, with three or four session — which are typically purchased by the employer anyway in an EAP — the member feels better and is able to get off of those drugs, reducing both usage and costs.

How can integrating medical and pharmacy data help employers assist members with chronic illnesses?

Employers can pull the data for members who have been diagnosed with one of five chronic illnesses — cardiovascular disease, hypertension, asthma, diabetes and COPD — then, with their consultant, identify whether those members are on a routine and taking their prescriptions for that specific illness. You can see if members are compliant, based on their refills, and can identify those who are not.

As an employer, you can then do a number of things to increase compliance within those categories. The employer can offer to pay for those drugs, because even though they are generally inexpensive, some members may not take them if they are living paycheck to paycheck. By simply paying for those drugs for its members, an employer could save the plan a lot of money.

You can also make a strategic decision as an employer, especially in a self-funded environment, to get members to work toward trying to achieve a better compliance rate. You can use your medical data to identify those members who have these diagnoses and couple that with your pharmacy data to identify those who are taking prescriptions.

Look at a 12-month period and how many scripts per month members are taking to identify any tailing-off patterns because refills have not been made. Maybe someone filled the first 90-day prescription, and the second one, but then never got it again.

What happened? How do you get the member back on track? Does the employer need to pay for the drugs? Do you need to assign a case manager to that member?

All of these things are fairly simple, straightforward specific actions that employers can take in their health plan to control costs and improve the health of their members.

Mark Haegele is director, sales and account management at HealthLink. Reach him at (314) 925-6310 or Mark.Haegele@healthlink.com.

Published in Chicago

While politicians and pundits continue to debate the future of health care reform, there is progress. Extending health coverage to age 26 for many young people and eliminating barriers for pre-existing conditions are beginning to show positive effects. Many employers adding or enhancing their wellness activities are lessening the increase in benefit costs.

Smart Business learned more from Barry Arbuckle, Ph.D., the president and CEO of MemorialCare Health System, about how businesses can implement changes to have a real effect on health care costs.

Are prevention and wellness good investments?

The work force is as critical to your bottom line as the quality of products and services. Costs of workers at high risk for chronic conditions are three times that of healthy employees. Healthier lifestyle programs in the state could save $1.7 billion annually, according to California Endowment. Research shows that two-thirds of the nation’s work force is overweight, and each overweight employee costs businesses an additional $500 to $2,500 in medical expenses and work loss. Wellness activities can save $1.49 to $4.91 for every dollar spent, reduce absences 30 percent and help recruit, retain and increase productivity. It can be as simple and relatively inexpensive as offering pedometers, walking programs and sessions on achieving better health.

How has MemorialCare’s Good Life initiative made a difference?

As a leader in employee health and wellness, we implemented The Good Life to build a culture of excellence that encourages healthier daily choices for staff. Focusing on such areas as hypertension, high cholesterol and weight control, our hospitals provide walking trails, fitness centers and nutritious, less expensive cafeteria food. We offer wellness fairs, newsletters, tracking tools and incentives to improve health. Our data suggests a 2 percent movement from chronic to improved health can save us more than $600,000 annually.

Is there evidence executive physicals work?

The stress of heavy commitments, constant challenges and long hours can result in lack of exercise, skipped doctor visits and unhealthy diets for busy leaders. Physicals offer preventive care including comprehensive evaluation, screenings and physical exams that are personalized, convenient and meet schedules of busy executives. Studies show executives undergoing physicals had 20 percent fewer health claims and missed 45 percent fewer workdays than those who did not.

Can implementing Lean initiatives help?

With declining revenues, escalating costs and demand for increased value and quality, implementing management systems and workshops such as Lean make a difference. They create a sense of purpose, team problem solving and long-term thinking by proactively engaging staff.  In four years with a new ‘lean’ attitude, our hospitals eliminated hundreds of unnecessary process steps and reduced distances staff travel to carry out their jobs by thousands of miles. We expect $195 million in net revenue returned over a decade. Most importantly, we’re improving patient care.

As one of only 29 employers worldwide to receive the Gallup Great Workplace Award, how important are engaged employees?

According to Gallup, the thing that makes a successful workplace is engaged employees — those wanting to know the company’s expectations so they can meet and exceed them. They use their talents and strengths to perform at consistently high levels, charging enthusiastically toward tough tasks, working with passion, driving innovation and moving companies forward. Engagement of passionate workers is a powerful factor in creating new ideas and catalyzing ‘outside-the-box’ thinking to improve business processes and customer service. We are honored to be the only employer in Orange or Los Angeles County to receive this prestigious award.

How are electronic medical records (EMRs) improving care?

Our digital EMRs allow clinicians to have immediate access to a patient’s health and medical history, minimize waste and inefficiency of paper-based processes, maximize clinical quality and patient outcomes at points of decision-making, reduce medical errors and improve patient care. Physician offices can link to our hospital EMRs, and patients can access records through an online portal.

What about retail health centers?

Retail health clinics offer convenient and affordable care for consumers seeking treatment for common medical conditions, immunizations and basic health needs. Our clinics in ALBERTSONS/Sav-On Pharmacy stores in Huntington Beach, Mission Viejo and Irvine are staffed by highly trained nurse practitioners and have close physician oversight. They provide treatment for common illnesses like colds, flu, sore throats, earaches, sinus infection, skin conditions and minor wounds, and also offer school physicals.

How can employers promote wellness?

Companies can partner with MemorialCare to offer worksite education, health fairs, screenings, health prevention and immunizations. Our experts help employers identify cost reduction strategies through benefit audits and partnerships to achieve competitive prices. The memorialcare.org online guides and physician referrals help your work force achieve a healthier lifestyle. Our Presidents’ Partnership programs inform and engage employers and seek solutions to health costs and challenges. Working together, we can identify improvements and advocate for better care for our communities.

Barry Arbuckle, Ph.D., is the president and CEO of MemorialCare Health System. The not-for-profit MemorialCare Health System includes Long Beach Memorial Medical Center, Miller Children’s Hospital Long Beach, Community Hospital Long Beach, Orange Coast Memorial Medical Center in Fountain Valley and Saddleback Memorial Medical Center in Laguna Hills and San Clemente. For additional information on excellence in health care, please visit memorialcare.org.

Published in Orange County

While politicians and pundits continue to debate the future of health care reform, there is progress. Extending health coverage to age 26 for many young people and eliminating barriers for pre-existing conditions are beginning to show positive effects. Many employers adding or enhancing their wellness activities are lessening the increase in benefit costs.

Smart Business learned more from Barry Arbuckle, Ph.D., the president and CEO of MemorialCare Health System, about how businesses can implement changes to have a real effect on health care costs.

Are prevention and wellness good investments?

The work force is as critical to your bottom line as the quality of products and services. Costs of workers at high risk for chronic conditions are three times that of healthy employees. Healthier lifestyle programs in the state could save $1.7 billion annually, according to California Endowment. Research shows that two-thirds of the nation’s work force is overweight, and each overweight employee costs businesses an additional $500 to $2,500 in medical expenses and work loss. Wellness activities can save $1.49 to $4.91 for every dollar spent, reduce absences 30 percent and help recruit, retain and increase productivity. It can be as simple and relatively inexpensive as offering pedometers, walking programs and sessions on achieving better health.

How has MemorialCare’s Good Life initiative made a difference?

As a leader in employee health and wellness, we implemented The Good Life program to build a culture of excellence that encourages healthier daily choices for staff. Focusing on such areas as hypertension, high cholesterol and weight control, our hospitals provide walking trails, fitness centers and nutritious, less expensive cafeteria food. We also offer wellness fairs, newsletters, tracking tools and incentives to improve health. Our data suggests a 2 percent movement from chronic to improved health can save us more than $600,000 annually.

Is there evidence executive physicals work?

The stress of heavy commitments, constant challenges and long hours can result in lack of exercise, skipped doctor visits and unhealthy diets for busy leaders. Physicals offer preventive care including comprehensive evaluation, screenings and physical exams, which are personalized, convenient and meet schedules of busy executives. Studies show executives undergoing physicals have 20 percent fewer health claims and missed 45 percent fewer workdays than those who did not.

Can implementing Lean initiatives help?

With declining revenues, escalating costs and demand for increased value and quality, implementing management systems and workshops such as Lean make a difference. They create a sense of purpose, team problem solving and long-term thinking by proactively engaging staff.  In four years with a new ‘lean’ attitude, our hospitals eliminated hundreds of unnecessary process steps and reduced distances staff travel to carry out their jobs by thousands of miles. We expect $195 million in net revenue returned over a decade. Most importantly, we’re improving patient care.

As one of only 29 employers worldwide to receive the Gallup Great Workplace Award, how important are engaged employees?

According to Gallup, the thing that makes a successful workplace is engaged employees — those wanting to know the company’s expectations so they can meet and exceed them. They use their talents and strengths to perform at consistently high levels, charging enthusiastically toward tough tasks, working with passion, driving innovation and moving companies forward. Engagement of passionate workers is a powerful factor in creating new ideas and catalyzing ‘outside-the-box’ thinking to improve business processes and customer service. We are honored to be the only employer in Los Angeles or Orange County to receive this prestigious award.

How are electronic medical records (EMRs) improving care?

Our digital EMRs allow clinicians to have immediate access to a patient’s health and medical history, minimize waste and inefficiency of paper-based processes, maximize clinical quality and patient outcomes at points of decision-making, reduce medical errors and improve patient care. Physician offices can link to our hospital EMRs, and patients can access records through an online portal.

How can employers promote wellness?

Employers can partner with MemorialCare hospitals and physicians by offering classes on reducing calorie intake, teaching desk exercises that become part of workplace routine, moving from unhealthy to nutritious foods in the cafeteria and vending machines, scheduling healthy meal preparation lessons, and providing programs that reward those losing weight, lowering blood pressure and other health risks, and more. MemorialCare offers worksite education, health prevention, screenings, health fairs and immunizations. Our experts help employers identify cost reduction strategies through benefit audits and partnerships to achieve competitive prices.

The memorialcare.org online guides and physician referrals help your work force achieve a healthier life. The MemorialCare Presidents’ Partnership informs and engages employers large and small on issues they all face and seeks solutions that address the challenges and costs of health care.

Working together, we can all identify improvements and advocate for better care for the communities we serve.

Barry Arbuckle, Ph.D., is the president and CEO of MemorialCare Health System. The not-for-profit MemorialCare Health System includes Long Beach Memorial Medical Center, Miller Children’s Hospital Long Beach, Community Hospital Long Beach, Orange Coast Memorial Medical Center in Fountain Valley and Saddleback Memorial Medical Center in Laguna Hills and San Clemente. For additional information on excellence in health care, please visit memorialcare.org.

Published in Los Angeles
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