Tag: Employers

Rube Goldberg Would Be Proud

Oct 31, 2023

By KIM BELLARD

Larry Levitt and Drew Altman have an op-ed in JAMA Network with the can’t-argue-with-that title Complexity in the US Health Care System Is the Enemy of Access and Affordability. It draws on a June 2023 Kaiser Family Foundation survey about consumer experiences with their health insurance. Long stories short: although – surprisingly – over 80% of insured adults rate their health insurance as “good” or “excellent,” most admit they have difficulty both understanding and using it. And the people in fair or poor health, who presumably use health care more, have more problems.

Health insurance is the target in this case, and it is a fair target, but I’d argue that you could pick almost any part of the healthcare system with similar results. Our healthcare system is perfect example of a Rube Goldberg machine, which Merriam Webster defines as “accomplishing by complex means what seemingly could be done simply.”

Boy howdy.

Health insurance is many people’s favorite villain, one that many would like to do without (especially doctors), but let’s not stop there. Healthcare is full of third parties/intermediaries/middlemen, which have led to the Rube Goldberg structure.

CMS doesn’t pay any Medicare claims itself; it hires third parties – Medicare Administrative Contactors (formerly known as intermediaries and carriers). So do employers who are self-insured (which is the vast majority of private health insurance), hiring third party administrators (who may sometimes also be health insurers) to do network management, claims payment, eligibility and billing, and other tasks.

Even insurers or third party administrators may subcontract to other third parties for things like provider credentialing, utilization review, or care management (in its many forms). Take, for example, the universally reviled PBMs (pharmacy benefit managers), who have carved out a big niche providing services between payors, pharmacies, and drug companies while raising increasing questions about their actual value.

Physician practices have long outsourced billing services. Hospitals and doctors didn’t develop their own electronic medical records; they contracted with companies like Epic or Cerner. Health care entities had trouble sharing data, so along came H.I.E.s – health information exchanges – to help move some of that data (and HIEs are now transitioning to QHINs – Qualified Health Information Networks, due to TEFCA).

And now we’re seeing a veritable Cambrian explosion of digital health companies, each thinking it can take some part of the health care system, put it online, and perhaps make some part of the healthcare experience a little less bad. Or, viewed from another perspective, add even more complexity to the Rube Goldberg machine.

On a recent THCB Gang podcast, we discussed HIEs. I agreed that HIEs had been developed for a good reason, and had done good work, but in this supposed era of interoperability they should be trying to put themselves out of business.

HIEs identified a pain point and found a way to make it a little less painful. Not to fix it, just to make it less bad. The healthcare system is replete with intermediaries that have workarounds which allow our healthcare system to lumber along. But once in place, they stay in place. Healthcare doesn’t do sunsetting well.

Unlike a true Rube Goldberg machine, though, there is no real design for our healthcare system. It’s more like evolution, where there are no style points, no efficiency goals, just credit for survival. Sure, sometimes you get a cat through evolution, but other times you get a naked mole rat or a hagfish. Healthcare has a lot more hagfish than cats.

I’m impressed with the creativity of many of these workarounds, but I’m awfully tired of needing them. I’m awfully tired of accepting that complexity is inherent in our healthcare system.

Amazon’s Coitus Interruptus: In or out?

Aug 29, 2022• 1

Each week I’ve been adding a brief tidbits section to the THCB Reader, our weekly newsletter that summarizes the best of THCB that week (Sign up here!). Then I had the brainwave to add them to the blog. They’re short and usually not too sweet! –Matthew Holt

Meanwhile, it’s time for Matthew’s tidbits and of course given their recent news-making I am going to focus on Amazon in health care. The news is of course that they are in health care in a big way, buying One Medical. The news is also of course is that they are out–shutting down Amazon Care.

This reminds me of the famous criticism delivered in the British parliament by one MP about another back the last time (in the 1970s) there was a vote about leaving the EU. “The Honourable gentleman can’t make up his mind. First he’s in, then he’s out. In, out. In, out. This is the politics of coitus interruptus.” After a moment a voice from the backbenches shouted “Withdraw.”

So is Amazon in or out?

They are out of their 4 year effort to build a hybrid telehealth-to-home medical group that helps mainstream employers manage their costs. This is despite stating their intent just a few months back to add new clinics and this year adding a decent number of employer clients including Hilton hotels–before that they only really had a few of their own employees as clients. Interestingly enough, it was the development of this platform that convinced Amazon that they didn’t need Haven–their alliance with JP Morgan and Berkshire Hathaway which was developing a similar offering.

They are in to the business of One Medical to the tune of a $3Bn acquisition as well as putting in $300m extra cash so far, and likely a lot more later. Like Amazon Care, One Medical has a hybrid telehealth and clinic approach (though no home visits as yet). When Amazon said they were killing Amazon Care, they suggested that a lack of employer uptake was the biggest problem. One Medical does have employer clients. But these aren’t mainstream low or medium wage employers to whom they are delivering capitated care at a worksite. In One Medical terms that means an employer pays their employees’ $200 per member annual fee, after which the employee can see a One Medical doctor. And curiously enough by far their biggest employer client is Google.

One Medical says that they lower overall costs for their employer clients, but to use another British political line, “they would say that wouldn’t they.” In reality One Medical does very little specialty or hospital care management, and via its relationships with local high-priced health systems is able to charge insurers very high prices for primary care which they seem to actually pay! (And yes I have lots of personal experience here..). Putting aside the fact that One Medical somehow is contriving to still lose loads of money–a big reason why it put itself up for sale–it is not an organization trying to manage costs for employers in value-based care arrangements, unlike say Firefly Health or even Crossover Health (of which Amazon is a big client for its lower paid workers).

You’ll notice that I am conveniently ignoring the Iora Health part of One Medical which they inexplicably bought last year. Iora focuses on capitated services for Medicare Advantage plans, and it is trying to manage costs. Though given the amount it’s losing, that effort isn’t going so well either.

It’s possible that Amazon is going to surprise us and try to turn Iora + One Medical into a capitated giant to work with and steal the margin of the big Medicare Advantage plans. Then later, move that strategy into mainstream employers.

But if they were going to try that it would probably have been easier and more culturally aligned to merge Iora with Amazon Care. My suspicion is that Amazon means what it says and is finding it too hard to manage costs for employers. My guess is it will jettison Iora, keep using Crossover and others to manage costs for its own lower-paid employees, and try to turn One Medical into a Whole Foods-like national brand for the cost- unconscious top 25% of Americans….and somehow make it profitable.

If they manage that it would be great for Amazon’s business. But it would be very disappointing for those of us hoping that Amazon was going to have a serious go at providing a low-cost, innovative service that was trying to lower overall health care costs for employers and make a serious dent in the market power of America’s high priced, under-delivering hospital systems.

Has Virgin Pulse’s Acquisition of Welltok Created a New Kind of Care Navigator?

Apr 19, 2022

By JESS DaMASSA, WTF HEALTH

Virgin Pulse has been a big name in workplace wellness for a long time – working with health plans and employers (including 25% of the Fortune 500) to provide care navigation, well-being services, health coaching and access to digital health point solutions for years. Yet, it raised some eyebrows at the end of last year when it announced its acquisition of data-driven wellness company, Welltok. So, what happens when one of the biggest names in worker wellbeing suddenly has access to a dataset of 250M healthcare consumers? Virgin Pulse’s CEO Chris Michalak stops by to talk about the value of that data, which he believes will not only turbo-charge Virgin Pulse’s engagement rates, but also provide new ways for the business to serve as a “full-on navigation capability” for employers, plans, and health systems.

As Chris puts it, Virgin Pulse has always been an “engagement company” but the addition of Welltok’s data turns it into an “activation company.” As Virgin Pulse continues to partner up with digital health point solutions, bring digital therapeutics into the fold, and build-out primary care relationships as a lead stream, the platform Chris describes starts to sound more and more like a navigation business that competes with the likes of Accolade or Included Health. Will Virgin Pulse one-day dip into primary care themselves and add their own virtual care providers? Will they build their own digital therapeutics with data derived from that rich Welltok database? We get into the ‘what’s next’ for the business as it integrates its latest acquisition and seeks to win more C-suite attention from employers seeking to better manage their employees’ access to healthcare benefits.

Health Plans Need to Go Farther To Get Us Through the COVID-19 Crisis. Employers Can Encourage Their Cooperation.

Apr 9, 2020• 1

By JEFFREY HOGAN and BRIAN KLEPPER

Among its less appreciated but more worrisome impacts, COVID-19 threatens to destabilize America’s health care provider infrastructure. Patients have largely been relegated to sheltering at home and, to avoid infection, are avoiding in-person clinical visits. The revenues associated with traditional physician office visits have been curtailed. Telehealth capabilities are gradually coming online, but are often still immature. The concern is that many practices will be financially unable to keep the doors open, compromising access and healthy physician-patient relationships.

Health plans have become health care’s bankers, controlling the funding that fuels larger care processes. Health insurance companies and health plan administrators rely on networks of doctors and hospitals to deliver health care services. They also rely on premium payments from employers to administer and pay for health care. In conventional fee-for-service, pay as you go arrangements, providers are paid after they have delivered care services. The stability of this approach, of course, assumes an unhindered flow of patients receiving care.

When the stability of that flow is disrupted, as it has been with COVID-19, physician practices become vulnerable. Solving that vulnerability would give members access to critical services – primary care, specialty care, urgent care and pharmacy coordination – during this epidemic. Without these resources, members will be forced to turn to overburdened hospitals, where they risk increased COVID-19 exposure.

Is Your Lack of “MQ” Costing You Money ?

Dec 1, 2018

By MICHAEL TURPIN

As health reform continues to play out across state legislatures and within Washington, employers continue to wrestle with rising costs and the corrosive effects of skyrocketing medical trends. It’s clear that there is enormous variability among employers in their confidence and abilities to identify, mitigate and manage the complexities of the employer sponsored healthcare delivery system.

Many industry pricing and billing practices are opaque. Employers are not always getting good advice and often have to entrust the management and control of employee benefit plans to generalists who do not have the time, resources or ability to engage in managing a corporate expense that has eclipsed a composite average of $11,000 per covered employee.

If employer sponsored healthcare is going to survive to drive market based changes that cut fraud, waste and insist on personal health improvement, corporate decision makers must improve their Medical Quotient (MQ). While larger employers such as Safeway have begun to reap the dividends of lower costs by driving employee health improvement and employee engagement through prevention and chronic illness management, small and mid-sized businesses are increasingly getting failing scores for understanding and managing their own cost drivers.

Success in managing medical costs begins with understanding one’s own MQ and committing to improve it against a rapidly changing market that is exceeding the rate of change of many HR and financial professionals. Jack Welch once commented, “When the rate of change outside an organization exceeds the rate of change within, the end is near.” While ignorance can be bliss, it is an expensive consequence in employer sponsored healthcare. Can HR generalists and less engaged CFOs and CEOs finally grab the horns of their own population health costs and drive toward a healthier tomorrow?Continue reading…

What Makes Health Care Different

Nov 1, 2018

By Donna Dubinsky

As best as I can tell, the arguments at the Supreme Court did not touch on a critical part of the discussion about government’s role in health care: the broken market for private insurance. And I think I know why.

A key assumption underlying the arguments, questions and answers was that all uninsured people are uninsured by choice. Sure, some very ill people with preexisting conditions do not qualify. But the implication was clear: Most uninsured people either do not want to pay for insurance or cannot afford it. Justice Samuel Alito said, “You can get health insurance.” Justice Ruth Bader Ginsburg made the point that people who don’t participate are making it more expensive for others, that their “free choice” affects others. The “free rider” problem is thoroughly examined.

It was as if the court forgot that the private insurance market does not function as a normal market. If you are not employed and you want to purchase insurance in the private market, you cannot unilaterally decide to do so. An insurer has to accept you as a customer. And quite often, they don’t. Insurers prefer group plans, with lots of people enrolled to spread the risk. Can you blame them? The individual consumer is a lot of work, is a higher risk and produces relatively little revenue.

Penn State’s Wellness Disaster: How to Avoid Employee Rejection of Wellness Programs–and Even Get Buy-In

Jun 1, 2018

By Brad Wolfsen

One of the lessons I frequently relearn in life is that people do not want unsolicited advice. An example that most parents can relate to is that my 6-year-old daughter does not want my help tying her shoes, even when we’re running late. Similarly, most employees — and certainly their dependents — do not believe they need to change how they manage their health.

This is why Penn State’s moderately structured, but poorly executed, wellness program failed so disastrously. The recent New York Times article about the program reports that “[a]fter weeks of vociferous objections by faculty members” University President Rodney A. Erickson—not the human resources leadership—announced it was abandoning the $1,200 annual surcharge levied against employees who refused to meet certain requirements. Those requirements included filling out a health risk assessment (HRA), participating in a biometric screening, and getting a medical check-up.

Human resources professionals’ fear of this type of outcome prevents many potentially meaningful and engaging wellness programs from even being introduced. To overcome this inherent resistance to wellness, broad employee understanding and support of the program is a prerequisite. The administrators at Penn State failed to attain this goal. Wellness — like any major change — cannot solely be a top-down effort, launched with a letter from the president, especially at consensus-driven academic institutions.

At Penn State, the outcome could have been successful if leaders had built a consensus prior to launching that wellness programs can save lives, reduce costs and improve performance. This is not the type of organization where decisions can be defended by saying: “This program is the one recommended by our health insurer.”

Building consensus for better outcomes

Through consensus-building, Miami University in Ohio successfully launched its voluntary health risk assessment, biometric screening and doctor visit program in 2010 and transitioned to a premium discount program in 2011. Premium discounts started at $15 per month and increased to $45 per month in 2013. More than 85 percent of the covered faculty and dependents participate in the program, and age-specific preventive screenings have increased substantially. The top three factors contributing to Miami University’s success are communication, consistency, and C-suite and departmental manager support.

Value-Based Reform

Mar 2, 2015• 31

By JACK COCHRAN, MD and CHARLES KENNEY

The U.S. Department of Health and Human Services’ recent announcement to move the Medicare program toward value-based payments is among the most promising recent developments in health care.

While changing the way we pay for care will not be easy, we believe that shifting away from fee-for-service to value-based payments could be a catalyst to a better, more affordable health care system in our country.

Three Benefits of Paying for Quality
There are numerous potential benefits to paying for quality rather than quantity, including the three we want to focus on today.

We believe this payment shift has the potential to accelerate progress toward achieving the Triple Aim – defined as better individual care, better population care, and lower cost.
We believe the payment shift by Medicare will accelerate the transition to value-based payments among commercial insurers – a major benefit to employers in terms of improved health for employees and greater affordability.
We believe value-based payments have the potential to help slow – and possibly reverse – the epidemic of physician burnout in the United States, particularly among primary care doctors.Continue reading…

It’s Past Time to End the Employer Mandate

Feb 12, 2015• 50

By DAVID DRANOVE and CRAIG GARTHWAITE

The New Year always brings many changes. In addition to soon to be broken resolutions, this particular year ushered in strict mandates requiring employers with more than 100 full-time employees to either provide health insurance to those employees or pay fines of between $2000 and $3,000. We’ve seen many firms publicly respond to this by cutting benefits to part-time workers. Despite the criticism that often accompanies these decisions, in many, if not all, of these cases this move benefits employees. Without the offer of employer-provided insurance they get access to the ACA exchanges.

Part of the criticism stems from the implicit belief that firms “give” benefits to their employees out of some form of philanthropy. These benefits are just a tax-preferred (though not really for low-income employees) form of compensation, and research shows that increases in benefit costs result in lower wages for employees. The firms that have cut benefits will either increase wages or lose a lot of employees. (If they cut benefits, do not raise wages, and do not lose workers, then they must not have been profit maximizing to begin with; we highly doubt that firms like WalMart would have knowingly forsaken an opportunity to maximize profits.)Continue reading…

What a New Benefit From Starbucks Teaches Us About the Future of Employer Provided Health Insurance

Jun 17, 2014• 12

By DAVID DRANOVE and CRAIG GARTHWAITE

Starbucks, which taught America to love lattes, made news this week with the announcement of a new tuition benefit for its partners (Starbucks-speak for employees). At first glance this move seems like simply another benefit in Starbucks relatively (for its industry) generous compensation package. In particular, Starbucks has long been heralded for providing health insurance for all partners working more than 20 hours per week. It is this connection to health insurance that we wish to explore. While Howard Schulz the founder and current CEO of Starbucks has long said the firm offers health insurance because it is the “right thing to do” for their employees, we have always suspected a more profit maximizing goal for this compensation decision. If we put on our strategy hats (we are both members of Kellogg’s Strategy Department), we can deduce that as a profit-maximizing firm, what Starbucks giveth with tuition benefits it may soon taketh away from health insurance benefits. In the process, Starbucks may be heralding the demise of employer sponsored health insurance, something we have predicted in previous blogs.