We had the opportunity to attend (and participate in the case of our partner Peter Freska!) MemorialCare’s Presidents’ Partnership 2022 where there were many great discussions around how to improve the healthcare experience for employers. We heard perspectives from a large local health system in MemorialCare, as well as perspectives from consultants, purchasing groups, and other healthcare experts.
We’re going to break down the highlights of each segment over the next few weeks. Today, let’s start with Elizabeth Mitchell’s discussion on the perspective of large US employers.
Elizabeth Mitchell is the President and CEO of the Purchaser Business Group on Health which brings employers together to source best practices in designing, implementing and spreading innovative programs to improve health plan performance for private employers and public purchasers. Their membership includes numerous large, innotive employers such as Walmart, Qualcomm, SalesForce, the UC system, Albertsons, AAA, Tesla, Activision, Levis, eBay, Costco, Microsoft, HP, Cisco, and many more.
Healthcare is poised to continue its unsustainable growth to $6.8T by 2030
She started her presentation with a discussion recent research published by Health Affairs projecting national health expenditures for the rest of the decade. Her key concern is the projection that our national health expenditure will reach $6.8 trillion by 2030 – today it stands at roughly $4 trillion. By 2030, healthcare spending will consumer one in every five dollars spent, money that could otherwise go towards business growth and higher incomes workers.
We’re already at a breaking point with the cost burden of healthcare impacting businesses and over half of employees not being able to meet the cost sharing requirements of their plan. Medical debt is one of the leading causes of personal bankruptcies in the country. So we need relief.
And the employer market is a great avenue to innovate our way to better healthcare and lower costs.
Surveyed employers arent getting enough from their (high) health spending
“For the money you spend on health benefits and services, do you believe your employees’ / members’ health is improving?”
63 percent said no
“If no, why are you not getting what you want from your health spending?”
Employers cited a variety of responses including:
- Low spending on primary care and prevention (the overwhelming majority)
- Low spending on wellbeing and social needs
- Lack of transparent information and/or data
- Poor quality of clinical care
- High prices and cost increases
- Pharmacy costs
And leaders know this is an issue.
87 percent of C-suite respondents believe the cost of providing health benefits will become unsustainable in 5-10 years
85 percent believe employers collectively can change healthcare cost to a moderate or considerable extent
So, how are health plans performing? Poorly.
Primary care spending is decreasing as a share of spending, leaving employees seeking higher cost care for higher acuity needs. There is too much variation with low-value care which leads to wasteful spending such as unnecessary low back imaging. And depression screening rates are abysmal.
Disassociate with value-extracting players and double-down on aligned partners
Finally, she provided some truly troubling quotes that reveal how some industry players just do not want to solve this issue.
Executives at hospitals, health systems, and more cited an overall focus on profits and growth, especially in extracting even more from the commercial market. So local employers have to take a long and hard look at the organizations they partner with to provide health benefits to their employees.
Employers can better align their interests by working with motivated parties to address issues around healthcare quality and reduce total spending. One such strategy we particularly like here at the LBL Group is Direct Contracting with high performing health systems. Local small and mid-sized employers can create a value-driven relationship with a community health system to improve the healthcare their employees receive and in turn, pay less for it.