Consumerism and Provider Performance Evolving Plan Sponsor Health Care Strategies

1
Consumerism and Provider Performance Evolving
Plan Sponsor Health Care Strategies

• May 26, 2005

Ray Herschman Cleveland/Chicago Ray.herschman_at_merc
er.com
2
The Problem The Sharks Jaws Open AgainMuzzle
Them or Prepare To Be Eaten
? (You are Here)
Source Kaiser Family Foundation/HRET, 2002
dental work by Dr. Milstein.
3
The Opportunity Focus on Improving Consumer
Selections of Providers and Treatment Options
Potential Savings for Categories of Health Care
Purchasing
18.0
17.0
16.3
16.0
?
14.0
12.7
?
12.2
12.0
10.0
Percentage Gross Reduction in Health Care Spending
7.3
8.0
?
6.5
6.0
5.1
5.0
3.7
4.0
1.9
2.0
0.9
0.0
0.0
Care Management
Effective Providers
Treatment Options
Plan Administrator
Coverage Level
Source Mercer Report to Business Roundtable
High potential lack of results
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The Opportunity End User Drives Demand

• Source IFTF, Center for Disease Control and
  Prevention

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The Strategy Consumer Driven Health
CareShifting Control and Accountability from
Employers to Employees
? Benefit Plan Designs
?
? Health Management Programs
?
? Communications/Education/Decision Support
?
6
The Approach Provider Performance

• Cost and Efficiency
• Best practice patterns and total costs to achieve
  target levels of quality (risk-adjusted,
  longitudinal average). Comparisons to other
  providers AND to other treatment options
• Clinical Quality
• Structure-, process- and outcome-based measures
  of safety, effectiveness, timeliness, and equity
• Patient Experience
• Survey based measures of patient experience and
  equity e.g., timeliness, courtesy, respect,
  education, treatment options and risks, follow-up

Source Institute of Medicine definitions
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The Approach Develop Provider Performance
MeasuresDistribution from a Comparatively
Efficient City
? TomorrowsBenchmark
50th ile
? Todays Benchmark
High Quality High
High Quality Low (Dream Suppliers)
Quality Index(outcomes or adherence to EBM)
50th ile
?Lower Higher?
Low Quality High (Nightmare Suppliers)
Low Quality Low
?Higher Lower? MD Cost Efficiency
Index (total cost per case mix-adjusted treatment
episode or chronic illness yr)
Source Regence Bx, Mercer
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The Approach (Cont.) Provider Performance -
Distribution Matrix
Source Midwest Carrier, Mercer
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The Approach Most Providers Excel on a Few
Service Lines (Hospital Quality Example)
A
B
C
D
F
Source 2001 MedPar
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The Application Decision Support
Source Canton HealthCare Coalition, Mercer,
HealthShare
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The Application Plan Designs That Motivate
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Conclusions

• Necessity is the mother of invention we need
  transparency
• Convention standards for measuring provider
  performance to move the market
• Ownership Objectivity, neutrality, information
  intermediaries