Their strategies for doing so are numerous, including an unprecedented level of consolidation.
But the race to consolidate is just one strategy for becoming the go-to healthcare provider in a community — and whether or not consolidation can lead to better care at a lower cost remains to be seen. A better strategy is to become a hero to employers in the community by reducing their healthcare costs. At a time when the Patient Protection and Affordable Care Act is raising premiums even higher for employers, hospitals can step in and take advantage of a new trend: offering a health plan directly to employers of all sizes in their community without having to acquire a health plan or buy actuarial expertise.
Forward-thinking hospitals can offer a number of attractive options to employers in their community. These “employer health ownership” plans give employers ownership of their own healthcare costs — and a share of the savings if their employees stay healthy. Hospitals benefit from the plans’ ability to firmly establish the health system at the center of the care relationship in their community.
Why would employers be attracted by a hospital or health system offering such a plan? Here are five possible reasons:
1. The plans enable employers to establish a direct payment relationship with primary care providers in their area. Rather than pay premiums to a distant insurer, employers pay a fixed per-employee/per-month fee directly to local primary care providers. This approach creates a strong relationship between the employer and the hospital’s primary care providers. Additional primary care practices outside of the hospital’s own network may be added to the plan to provide more options and increase the plans’ attractiveness to larger employers.
2. The plans incentivize employees to become healthier. The per-employee/per-month payment model gives employees extensive access to primary care services with no copays or coinsurance. This eliminates payment as a barrier to employees seeking primary care. Employers can also use the plan to directly incentivize employees to meet adherence and wellness goals.
3. Employers pay primary care providers appropriately so they can deliver the best care to their employees. Because PCPs receive enhanced revenue, largely through a fixed, per-employee fee each month, the health plan disconnects primary care revenue from encounter volume. This empowers PCPs to focus completely on the value — rather than the volume — of care they deliver. This approach also reduces the burden of insurance administration on PCPs, freeing up more time for them to practice medicine. And because the plans pay for all forms of patient contact, not just office visits, care can be provided in the most appropriate venue to save the employer money and the employees time.
4. Employers buy insurance for specialist and hospital care. The health plan delivers peace of mind by providing insurance for more expensive, less common care events like visits to a specialist and hospitalizations. And, of course, specialist and hospital referrals remain in the sponsoring hospital’s network.
5. Employers can take control their healthcare costs. An employer health ownership plan sponsored by a hospital enables employers of all sizes to take advantage of self-insurance. In contrast to a fully-insured employer, whose healthcare costs are 100-percent fixed, a self-insured employer can take advantage of any cost savings that result from better management of employees’ health. Employers also benefit from complete transparency about their healthcare spending.
Building strong relationships with the people who buy care is key to success in an uncertain reimbursement environment and an increasingly competitive market. By offering employers in their community an opportunity to contract directly with them, health systems can take control of their future.
William (B.J.) Lawson, MD, is CEO of Physician Care Direct LLC, a Cary, N.C., company that partners with employers and health systems to make healthcare more affordable.
